Rent-To-Own Reputation Risk…A New, But Obvious Twist!

Michael D. Moberly    September 27, 2012

Actually, I would be hard pressed to characterize the following complaint brought by the Federal Trade Commission (FTC) against seven rent-to-own (RTO) operators and a software company as representing a ‘pure’ example of materialized reputation risk.  That’s because, at least in my view, there are quite compelling indicators of intent, collusion, and premeditation. Incidentally, both defendants opted (agreed) to settle the case out of court earlier this week.

The complaint stated that the RTO’s had software secretly installed on (their) rented computers to collect particular data that enabled RTO stores to track the (physical) location, among other things, of rented computers without consumers’ knowledge.

More specifically, the complaint stated that by installing the specifically designed software in its rented computers, allowed the RTO’s to (a.) capture screenshots of confidential and personal information, (b.) log consumers’ computer keystrokes, (c.) track consumer’s location, and (d.) in some instances, take webcam pictures of people (consumers) in their home, again, without notice or consent from the consumers.

The software embedded in the (rented) computers contained a “kill switch” which RTO stores could use to disable a computer if it was (reported) stolen, or if a renter failed to make timely (rental) payments.  The software also had an add-on program known as “detective mode” that…

  • revealed private and confidential details about computer users, such as user names and passwords for email accounts, social media websites, financial institution data, Social Security numbers; medical records; private emails to doctors, bank and credit card statements, and webcam pictures of individuals in their home.
  • could collect data that allowed RTO operators to covertly track the location of rented computers and the computers’ users.
  • presented a fake software program registration screen that tricked consumers to provide personal contact information.

I, and I suspect readers of this blog won’t find the elements in this complaint rising to the level of ‘rocket science’ in as much as this software was designed to facilitate recovery of stolen and/or late rental payment merchandise by the RTO industry.

The settlement that was agreed to prohibits RTO’s from engaging in any further (consumer) spying of this nature, e.g., location tracking without notice and consent of consumers and/or deceptively collecting and disclosing consumer information, etc.

An interesting element of the FTC’s response was directed specifically to the software firm by stating quite succinctly, that providing RTO operators the means, i.e., software, to break the law was deceptive and unfair.

I certainly don’t believe readers should assume incidents such as this represent the proverbial one-off.  Instead, there’s no doubt, at least in my view, that technologies will continue to be developed and applied to achieve whatever a user wishes and wherever it’s functionality may lie on a legal – illegal continuum.  But, one thing is crystal clear, that is, consumer perceptions and expectations (reputation) are powerful and valuable intangible assets, which in most instances, once compromised or lost, are quite expensive and time consuming to recover, if, that is, recovery is even an option?

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance.  And, I always welcome your inquiry at 314-440-3593 or [email protected]

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