• by Wendy Davis , Staff Writer @wendyndavis, September 25, 2012

A company that allegedly installed spyware on rent-to-own computers has been charged by the Federal Trade Commission with the "unfair gathering and disclosure" of personal information.

The company, DesignerWare, enabled some fairly egregious privacy violations, if the allegations are true. Still, the FTC's complaint is notable because it appears to mark the first time the agency has said outright that merely collecting sensitive, personal information can be unfair.

That in itself makes this a significant case, says Justin Brookman, director of consumer privacy at the digital rights organization Center for Democracy & Technology. He tells MediaPost that the charges reflect the FTC's "most aggressive use of unfairness in a privacy case." He adds: "The complaint states explicitly that collecting sensitive personal information (including location information)" without disclosure is an unfair practice "resulting in significant consumer harm."

What did DesignerWare do? According to the FTC, the company offers rental shops a spyware program, "Detective Mode," which is marketed as a way to locate computers when they're lost or stolen, or when lessees are late with payments. Once installed, Detective Mode allegedly can monitor all activity on the computer -- meaning that users' private information doesn't stay that way for long.

"Keystroke logs have displayed usernames and passwords for access to email accounts, social media websites, and financial institutions," the FTC alleges. "Screenshots have captured additional confidential and personal information, including medical records, private emails to doctors, employment applications containing Social Security numbers, bank and credit card statements, and discussions of defense strategies in a pending lawsuit."

Even when Detective Mode isn't on, DesignerWare's other software, PC Rental Agent, allegedly tracks users' locations by logging the WiFi hotspots that the wireless card picks up. That data can then be used to track people's movements over time. What's more, the FTC says, the information gets sent to rental stores -- meaning their employees can physically track the whereabouts of people who've leased computers.

DesignerWare also allegedly sent some users pops purporting to request registration data for products like Yahoo Messenger and Internet Explorer. The pop-ups demanded users'  names, addresses, phone numbers and other information -- all of which was sent back to the rental store, according to the FTC.

And that's not all. The company's Detective Mode software also can turn on a computer's webcam to secretly take photos of anyone within view. "In numerous instances, Detective Mode webcam activations have taken pictures of children, individuals not fully clothed, and couples engaged in sexual activities," the FTC says.

The upshot, according to the FTC, is that DesignerWare's practices cause, or likely will cause  "substantial harm to consumers."

"Because of DesignerWare’s intrusions, consumers are at risk of harm from the exposure of personal, financial account access, and medical information to strangers," the FTC says.  "Consumers are harmed by DesignerWare’s unwarranted invasion into their homes and lives and its capture of the private details of individual and family life."