Retailers providing consumers with electronics on a rent-to-own basis face many challenges in ensuring that they are paid for the electronics that they rent. In particular, computers are small and easy to hide if a retailer seeks to repossess the computer from a non-paying customer. The temptation to use software that allows the retailer to view where the computer is located and what the renter is doing with the computer is strong, however, the consequences of doing so can be high. Obtaining information from the computer without the renter’s knowledge or consent not only erodes the renter’s trust and confidence in the retailer, but also opens the retailer up to possible civil and criminal liability.
The recent settlement of charges brought against several rent-to-own companies by the Federal Trade Commission highlights that using software that can log onto a computer, turn on the webcam to take photographs, take screen shots of the computer user’s activities on the computer, and log the keystrokes of the computer user, comes with a price. According to one news report, civil penalties are not a part of the settlement because civil penalties cannot be imposed for a first violation of the Federal Trade Commission Act. However, the companies are required to cease using their “spy tools” and, presumably in the future, advise renters of the use of tracking software.
Further, aside from possible federal action and the costs associated with defending such actions, retailers need to consider possible civil and criminal liability under state laws. While laws vary from state to state, several states recognize a tort for invasion of privacy, such as intrusion upon seclusion. Capturing images of a person in a private setting, particularly while engaged in private acts, without the person’s knowledge or consent, may subject a retailer to a civil action. Even in states that do not recognize a tort for invasion of privacy, under certain circumstances, a person who secretly videotapes an individual engaged in private actions may be liable for the tort of intentional infliction of emotional distress. Remember that if you use a webcam to take pictures of the area surrounding the computer, you may be capturing images of individuals other than the renters. Criminal liability is also arguably possible if the state has a statute prohibiting unlawful surveillance and, in some states, there is the possibility, in certain situations, of criminal liability for installing and using key stroke logging software to collect personal information.
If you decide that despite the risks, it is necessary to install and use tracking software, be sure to advise renters of the presence of the software, its uses, and your policy on its use. The best practice would be to obtain an acknowledgement from the renter, in writing, that the renter was so advised.