Furniture Chain Pays Millions for Spying with Rented Computers

Tuesday, October 21, 2014

Putting spyware on computers has been popular for years among rent-to-own companies. The Federal Trade Commission (FTC) reached a settlement to halt the practice, two years ago, with seven of them and the designer of software they used to keep an eye on customers.

Last week, Attorney General Kamala Harris announced that Georgia-based Aaron’s Furniture, the second-largest furniture store in the country, with around 75 outlets in California, agreed to put up $25 million as reimbursement for an estimated 100,000 customers who signed lease agreements between April 1, 2010 and March 31, 2014. The company will also pay the state $3.4 million in civil penalties and fees.

The software, from DesignerWare, LLC, was ostensibly meant to track the whereabouts of rentals and contained a kill-switch for disabling them in the event of nefarious behavior. The software came with an add-on program called “Detective Mode,” which did a bit more.

The program logged keystrokes, captured screen shots and used a computer’s camera to take photographs. It presented a fake program registration screen that was used to capture personal information of the customer, according to the FTC. The information included passwords, medical records and correspondence, Social Security numbers, financial information and pictures of the family in their most private moments.

DesignerWare shared the information with stores, the FTC said.

The agency charged the companies violated the Federal Trade Commission Act—perhaps the part about “unfair or deceptive acts or practices in or affecting commerce” —and ordered them not to do it again. The companies also must submit to 20 years of monitoring and agree in advance to pay a $16,000 fine for each future violation.

The companies were also told they couldn’t use the information they had already gathered on their customers, most prominently for debt collection. The spyware had been on around 420,000 computers.

Aaron’s customers don’t have a lot of money. The FTC said almost all rent-to-own customers make less than $50,000 a year and very few go to college. They will probably be receiving restitution notices in early 2015, with payment offers varying depending on the contracts they signed.

Aaron’s signed off on a related FTC complaint (pdf) in October 2013 that more directly said that top company executives “not only knew that its franchisees were using PC Rental Agent and activating Detective Mode without notice to computer users, they also knew that data and information gathered by Detective Mode could be highly intrusive and invaded consumers’ privacy.”

California’s complaint against Aaron’s invoked the state’s Karnette Rental-Purchase Act, which the attorney general called the strongest rent-to-own law in the country. Besides the spyware allegations, the state complaint said Aaron’s charged improper late fees, left out important contract information it should have disclosed and overcharged customers who paid their contracts off early.

No company individuals were charged with a crime by either the state or federal government.

–Ken Broder


To Learn More:

Aaron’s Settles with California for $28.4M (by Ashley Perry, Legal Newsline)

State Slams Aaron's Rentals for $28 Million (Courthouse News Service)

Aaron's Agrees to Stop Spying on Computer Renters (by Stuart Pfeifer, Los Angeles Times)

DesignerWare Settlement: Companies Agree to Stop Snooping on People's Home Computers (by Richard Lardner, Associated Press)

Attorney General Kamala D. Harris Reaches $28.4 Million Settlement with Rental Business over Spyware, Unfair Business Practices (California Department of Justice)

FTC Halts Computer Spying (Federal Trade Commission)

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