09/25/2012 05:28 pm ET Updated Sep 26, 2012

DesignerWare's 'Detective Mode' Snooped On Computer Users In Their Homes, Snapped Pictures: FTC

The customers were renting computers until they could afford to buy them.

What they didn't know was those PCs were tracking their every move, even their most private moments.

On Tuesday, the Federal Trade Commission charged seven rent-to-own companies and a software design firm with secretly installing spyware on rental computers.

The FTC said a software company called DesignerWare sold a program that helped rent-to-own stores track and recover rented computers. The software contained a program known as "Detective Mode" that tracked renters' locations and collected payments from them if the computer was not returned, the FTC said. The program could log users' key strokes, capture screen shots and take photographs using a computer’s webcam, the commission alleged.

The spyware, which had been installed on about 420,000 computers worldwide, could collect a wide variety of sensitive data, including user names and passwords, Social Security numbers, medical records, private emails to doctors, bank and credit card statements, and webcam pictures of children, partially undressed individuals, and "intimate activities at home," according to the FTC.

"In numerous instances, Detective Mode webcam activations have taken pictures of children, individuals not fully clothed, and couples engaged in sexual activities," the FTC said in its complaint.

Such tracking and collecting of data without consumers' consent violates the Federal Trade Commission Act, the commission said.

“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,” FTC Chairman Jon Leibowitz said in a statement. “The FTC orders today will put an end to their cyber spying.”

The FTC, along with the Illinois Attorney General, said they had reached settlements with the software design firm, DesignerWare, and seven companies operating rent-to-own stores, including franchises of Aaron’s, ColorTyme, and Premier Rental Purchase.

The FTC does not have the authority to fine the companies for their first violation of the law. But as part of the settlement, the commission will monitor the companies' compliance for the next 20 years and fine them up to $16,000 for every future violation.