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Updated: Fri, 14 Dec 2012 12:05:10 GMT | By Duncan Hood

Rented PCs that can spy on you? Watch out

Canadians work less per week and take more vacations than Americans. But is it really hurting our prosperity?


 (© Getty Images)

(Getty Images)

Two summers ago, Crystal and Brian Byrd, a young couple from Caspar, Wyo., leased a Dell laptop from a local franchisee of Aaron's, a national rent-to-own chain. The two made all their payments on time, according to court documents, and by October they had paid enough to own the computer outright. But somewhere along the line at least one of those payments got lost, and just a few days before Christmas 2010, a manager from the rent-to-own store showed up at the Byrds' apartment looking to take the computer back.

The confrontation that followed lasted just a few minutes, but it was long enough to spark a class-action lawsuit, a criminal investigation spanning at least three states and a major regulatory crackdown in the U.S. Now, for the first time, Canadian officials have confirmed they too are investigating the issues at the heart of the dispute.

According to a lawsuit the Byrds later filed, the manager, Christopher Mendoza, first demanded the Byrds return the computer. He then produced a picture, taken with the laptop's webcam, of Brian Byrd using the machine. When Byrd demanded to know where Mendoza got the photo, Mendoza refused to answer.

Rented PCs that can spy on you? Watch out

It turns out the picture was taken using a program called PC Rental Agent. Developed by a rent-to-own store owner in Pennsylvania, PC Rental Agent allows store owners to shut down machines that have been reported stolen or whose renters are behind on payments. The program also comes with a feature called Detective Mode. Designed to be used only on stolen machines, it allows the rental stores to capture keystrokes, track locations and snap webcam pictures, all without the users knowing.

Shortly after the Byrds went public with their story, the Federal Trade Commission (FTC) started looking into PC Rental Agent. This fall, the agency launched an official complaint against the company that manufactures it, DesignerWare. According to the complaint, PC Rental Agent had been used to repeatedly "reveal private, confidential, and personal details" of computer users, all without their knowledge. Using Detective Mode, rent-to-own stores had captured screenshots of medical records, social security numbers and bank and credit-card statements. It gets more tawdry. "In numerous instances," the complaint says, "Detective Mode webcam activations have taken pictures of children, individuals not fully clothed, and couples engaged in sexual activities." One former store employee who testified at the Byrds' lawsuit said she'd seen a picture taken of a woman sitting at her computer, smoking from a bong.

In the wake of the investigation, DesignerWare declared bankruptcy, listing the Byrds along with investigators in California and the federal attorney general's office as potential creditors. In late September, the company signed off on a consent order from the FTC that bars it from ever again using, selling or licensing any monitoring technology on rented computers.

Tim Kelly, the owner of DesignerWare, says the scandal has devastated his business. He was forced to lay off his entire staff. Kelly maintains his company did nothing wrong but is the victim of overzealous bureaucrats who hate the rent-to-own field. "There is only two other industry's [sic] that we could have licensed the software too [sic] that would have caused more issues," he wrote in an e-mail to Canadian Business. "That's a Whore House or a Pawn Shop." Kelly also says the FTC never produced any evidence backing up its claims that PC Rental Agent was used to snap sexual or otherwise revealing photos.

DesignerWare was dropped from the Byrds' lawsuit after the company declared bankruptcy. But that doesn't mean the privacy issues with its software have all been resolved. As part of its complaint, the FTC revealed that DesignerWare had sold PC Rental Agent to 1,600 rent-to-own stores and installed the software on some 420,000 computers, including some in Canada.

Both the FTC and Kelly say the consent agreement DesignWare signed applies to its Canadian operations. But the question of whether, how often and by whom the Detective Mode function was used here in the past remains unanswered.

Kelly says he doesn't know how many Canadian stores licensed the software, nor would the FTC reveal what Canadian stores were involved. In time, however, the office of Canada's Privacy Commissioner may provide some answers. Spokeswoman Isabelle Moses says the commissioner is aware of the recent FTC settlement and of the issue in general. "We are currently conducting an investigation, initiated by the Privacy Commissioner, related to the use of this type of software in Canada," she says.

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