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Paranoid delusion from 80s R&B artist Rockwell?  Not necessarily, if he had used a computer from a rent-to-own store.  Because according to lawsuits filed by the FTC, many stores — including franchisees of Aaron’s, ColorTyme, and Premier Rental Purchase — spied on their customers through secret software that logged key strokes, captured screen shots, and in some cases, remotely activated the computer’s webcam to take pictures of people in their homes.  Huh?  Yeah, really.

Through software marketed by DesignerWare LLC, rent-to-own companies could trip a kill switch that deactivated computers if they were stolen or if renters didn’t keep current with their payments.  The software also offered a wiping feature that let stores erase the hard drives before renting the computers to other people.  But it didn’t end there — and that’s where the story takes an eerie turn.

The software included an add-on program called Detective Mode.  According to the complaint, once the rent-to-own store gave the go-ahead, DesignerWare would remotely complete the Detective Mode installation process.  That let the stores secretly monitor renters’ online activities.  Neither DesignerWare nor the stores that used Detective Mode told people they were being monitored.

The FTC says the data gathered by the software and provided to rent-to-own stores using Detective Mode revealed confidential details about people’s computer use.  What kind of info?  User names and passwords for social networking sites and financial institutions; Social Security numbers; medical records; bank and credit card statements; and private email just for starters.  And those secret webcam shots?  The FTC says they included photos of family members, folks who were, um, not entirely clothed, and the full range of, uh, intimate activities that take place in proximity to people’s home computers.

DesignerWare sent the info to an email account designated by each store.  At its highest setting, Detective Mode took webcam pictures and screen shots every two minutes while the computer was on.  As a result, rent-to-own stores that used that setting collected lots of info about some people.

Another problem with the software:  It served up a fake registration screen that tricked people into giving their personal contact and location information to the rent-to-own stores.

The complaint against DesignerWare charged that licensing and enabling Detective Mode, gathering sensitive personal information about renters, and disclosing that data to the rent-to-own businesses were unfair practices, in violation of the FTC Act.  Also alleged as unfair:  DesignerWare’s use of geolocation tracking software without first getting the OK from renters and notifying computers’ users, and giving the rent-to-own businesses the means to break the law.  In addition, the FTC charged that the company deceptively gathered and disclosed personal information collected from that fake software registration form.

The seven rent-to-own companies were charged with violating Section 5 by secretly collecting people’ confidential information, by using it to try to collect money from them, and by serving up  those bogus registration pages to get people to disclose personal data.

In addition to DesignerWare and Timothy Kelly and Ronald P. Koller, two of its corporate officers, the FTC’s lawsuits name Aspen Way Enterprises, Inc.; Watershed Development Corp.; Showplace, Inc., doing business as Showplace Rent-to-Own; J.A.G. Rents, LLC, d/b/a ColorTyme; Red Zone, Inc., d/b/a ColorTyme; B. Stamper Enterprises, Inc., d/b/a Premier Rental Purchase; and C.A.L.M. Ventures, Inc., d/b/a Premier Rental Purchase.

The proposed settlements ban the respondents from using monitoring software like Detective Mode and from using deception to gather any information from consumers.  The orders also prohibit the use of geolocation tracking without consumer notice and consent and bans the use of fake software registration screens to collect personal information.  In addition, DesignerWare is barred from providing others with the means to commit illegal acts.  The seven rent-to-own stores are prohibited from using information improperly gathered from consumers in connection with debt collection.

Interested in filing a public comment about the settlements?  Just follow the links and submit it online. The deadline is October 25, 2012.

Next:  Rent-to-own may not be your business, but there’s a lot you can take from the FTC settlements



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