The Federal Trade Commission settled with seven rent-to-own companies and a software design firm which licensed software that defendants used to spy on 420,000 consumers via rented computers.

The software was intended to track the location of rented computers, but when activated by the defendants without renter’s knowledge or consent, it “revealed private, confidential, and personal details about the computer user,” according to one of the complaints filed by the agency.

DesignerWare LLC licensed the software on computers rented to consumers by rent-to-own companies Aaron’s, Aspen Way Enterprises, B. Stamper Enterprises, ColorTyme, Premier Rental Purchase, Showplace, Inc., Watershed Development Corp. and affiliates.

According to the FTC, the “Detective Mode” software captured screenshots, logged computer keystrokes, and even took webcam pictures. Data collected by the defendants included user names and passwords for e-mail accounts, for social media Web sites, and for financial institutions. The software also captured Social Security numbers, medical records, bank and credit card statements, private e-mail messages, webcam pictures of children, and partially undressed individuals engaged in intimate activities at home.

The agency alleged that DesignerWare and the rental companies violated the FTC Act: DesignerWare by providing the means for the companies to use geolocation tracking software without the renters’ knowledge and consent, and the rental companies for illegally collecting renters’ confidential and personal information.

Under the terms of the settlement, the defendants are barred from any spying in the future, from activating location-tracking software without consumer consent and notice, and from deceptively collecting and disclosing information about consumers.

The agreements are open for public comment until October 25.

To read the complaints and proposed agreements in the actions, click here.

Why it matters: “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,” Chairman of the FTC Jon Leibowitz said in a statement about the cases. “The FTC orders today will put an end to their cyber spying.”