Evan Schuman's StorefrontBacktalk

This practice is more common than you might think. It is not uncommon for car lessors or financers to install both a kill switch and a hidden GPS device on leased or financed vehicles. So if a vehicle is not fully paid for, not only can it be disabled (say as you are driving a sick relative to the emergency room) but located by GPS. This is something Walmart shoplifters recently learned the hard way. Other technologies, including LoJack, OnStar, remote access apps, etc., may effectively accomplish the same thing. So the DesignerWare software enabled Aaron’s and others to engage in “self help,” something the law typically disfavors, but in the case of items purchased on credit may amount to electronic repossession. Bad enough.

But it gets worse.

The DesignerWare software also has a “Detective” mode. This enables the rental companies to invoke a key logger and capture lessees’ keystrokes—their account passwords, their bank and credit information, their personal and intimate correspondence, just about anything they typed. The rental companies could also turn on the webcam and see what the lessee was doing in the intimacy of, well, of anything. The software has a “GPS” mode, too, and can reveal the location of the hardware, enabling both repossession and potential harassment of the customer.

Now, all this might have been legal, if the rental companies had disclosed these “features” of the rent-to-own products. Remember, rights to privacy can be waived, although not all waivers would be “fair.” For example, it would certainly not be fair to say “You can have this computer with a webcam for only $30 a month provided we can watch everything you and your girlfriend do on the cam.” TMI.

The FTC sued seven rent-to-own companies and the software designers, alleging that these practices were deceptive and unfair. The settlement, announced Sept. 25, 2012, by the FTC and various States’ Attorney General, prohibits the software company and the rent-to-own stores from using monitoring software like Detective Mode and bans them from using deception to gather any information from consumers.

By the way, for those who want to dig into this topic more deeply, here are some potentially helpful related documents: the FTC’s original complaint, along with the FTC’s analysis, and the government’s news release about it. (Note to FTC lawyers: When coming up with URLs for your documents, you should really rethink how you shorten the word “analysis.”)

The agreement also prohibits the use of geolocation tracking without consumer consent and notice and bars the use of fake software registration screens to collect personal information from consumers. In addition, DesignerWare will be barred from providing others with the means to commit illegal acts and the seven rent-to-own stores are prohibited from using information improperly gathered from consumers in connection with debt collection. All the proposed settlements contain record-keeping requirements to allow the FTC to monitor compliance with the orders for the next 20 years.

If you disagree with me, I’ll see you in court, buddy. If you agree with me, however, I would love to hear from you.