Aaron's Inc., a rent-to-own retailer, has agreed to stop using software to secretly spy on and photograph customers who rented computers.
The Federal Trade Commission had accused Aaron's and its franchisees of using software to monitor customers' computer keystrokes and secretly watch them in their homes through the computers' webcams.
In some instances, the company captured images of customers engaged in what the FTC called "intimate activities."
The Atlanta company, which operates about 1,800 U.S. stores including dozens in California, agreed to stop the monitoring in a settlement with the FTC.
Under terms of the settlement, Aaron's and its franchisees will be be prohibited from using monitoring technology that captures keystrokes or screen shots and will not activate the webcam and microphone on a customer's computer, except to provide technical support requested by customers.
"Consumers have a right to rent computers free of cyberspying and to know when and how they are being tracked by a company," said Jessica Rich, director of the FTC's consumer protection bureau. "By enabling their franchisees to use this invasive software, Aaron's facilitated a violation of many consumers' privacy."
The settlement also requires Aaron's to give clear notice and obtain consent from consumers in order to install technology that allows location tracking of a rented product.
For computer rentals, the company will have to give notice to consumers not only when it initially rents the product, but also at the time the tracking technology is activated, unless the product has been reported by the consumer as lost or stolen.
Aaron's declined to comment.
Aaron's shares were up 57 cents, or 2%, to $28.86 in midsession trading.