FTC: Software used by rent-to-own stores spied on customers

IDG News Service - The U.S. Federal Trade Commission has reached proposed settlements with a software vendor and seven rent-to-own stores after the agency accused them of installing spyware on rented computers that captured screenshots of personal information, logged keystrokes and, in some cases, took webcam pictures of people in their homes.

The software, from DesignerWare of North East, Pennsylvania, contained a kill switch the rent-to-own stores could use to disable a computer if it was stolen, or if the renter failed to make timely payments, the FTC alleged. An add-on program, called Detective Mode, helped the rent-to-own stores locate rented computers and collect late payments, the agency alleged.

However, DesignerWare owner Timothy Kelly said the FTC has "grossly misunderstood" the purpose of PC Rental Agent, an antitheft software package. The software is designed to track down stolen computers, and it's against the terms of service to use the software to spy on rental customers, he said.

"We have never been informed by anyone that anyone misused the software," Kelly said. "The FTC has never produced to us anyone misusing the software."

The small firm settled the FTC's complaint because it would have been too costly to fight the agency, Kelly said.

But the FTC alleged that DesignerWare's software helped spy on rent-to-own customers who were late on their payments. Kelly testified in a 2011 trial that the software can lock a delinquent customer out of the computer.

As of August 2011, more than 1,600 rent-to-own stories in the U.S., Canada and Australia had licensed PC Rental Agent, the FTC said in its complaint against DesignerWare. The software has been installed on about 420,000 computers, the FTC said.

PC Rental Agent is not detectable to a computer's user and the computer's renter cannot uninstall it, the FTC said. DesignerWare recommends, but does not require, its licensees to disclose the presence of PC Rental Agent on a rented computer, the agency alleged.

"An agreement to rent a computer doesn't give a company license to access consumers' private emails, bank account information, and medical records, or, even worse, webcam photos of people in the privacy of their own homes," Jon Leibowitz, the FTC's chairman, said in a statement. "The FTC orders today will put an end to their cyber spying."

Data gathered by DesignerWare and provided to rent-to-own stores using Detective Mode revealed, in some cases, user names and passwords for email accounts, social media websites, and financial institutions, the FTC alleged. The software also revealed Social Security numbers, medical records, private emails to doctors, bank and credit card statements, as well as webcam pictures of children, partially undressed individuals, and intimate activities at home, the agency alleged.