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Office of the Secretary
United States of America
FEDERAL TRADE COMMISSION
Washington, D.C. 20580
April 11, 2013
Commenters Expressing General Support for the Consent Orders
In the Matter of DesignerWare, LLC; Timothy Kelly and Ronald P. Koller; Aspen Way
Enterprises, Inc.; B. Stamper Enterprises, Inc.; C.A.L.M. Ventures, Inc.; J.A.G. Rents, LLC; Red
Zone, Inc.; Showplace, Inc.; and Watershed Development Corp.
File No. 112 3151, Docket No. C-4390 Through Docket No. C-4398
Thank you for your comment regarding the Federal Trade Commission’s consent agreements in
the above-entitled proceeding. The Commission has placed your comment on the public record
pursuant to Rule 4.9(b)(6)(ii) of the Commission’s Rules of Practice, 16 C.F.R. § 4.9(b)(6)(ii),
and has given it serious consideration.
The Commission appreciates your interest in this matter. The Commission is committed to
safeguarding consumer privacy and believes the proposed orders in this matter will substantially
protect consumers and help deter future privacy violations by rent-to-own companies (“RTO
stores”) using monitoring and/or tracking technologies. The proposed orders with DesignerWare
and its owners ban them from using or providing third parties with technology that allows RTO
stores to monitor consumer use of rented computers. The proposed orders with the RTO stores
similarly ban them from using such technology in connection with a covered RTO transaction.1
The proposed orders also prohibit DesignerWare, its owners, and the RTO stores from using
geophysical location tracking technology to gather information from any rented computer
without providing clear and prominent notice to and obtaining affirmative express consent from
the computer’s renter at the time the computer is rented. Computer users must also receive clear
and prominent notice immediately prior to each time tracking technology is activated.
In addition, the proposed orders prohibit DesignerWare, its owners, and the RTO stores from the
deceptive collection of consumer information via fake software registration notices. The RTO
stores are furthered barred from using any information that was improperly gathered from
consumers through any monitoring or tracking software to collect on a consumer rental contract.
DesignerWare, its principals, and the RTO stores must destroy any data that was collected
through any improper use of monitoring or tracking software, and must encrypt any such data
that is collected properly in the future (i.e., pursuant to the requisite notice and consent). Further,
the proposed orders bar misrepresentations about the privacy or security of any personal
information gathered from or about consumers. Should DesignerWare, one of its owners, or an
RTO store violate any term of a final order, it could be liable for civil penalties of up to $16,000
per violation of any term of the order, or up to $16,000 per day in the case of continuing
violations (as provided by Section 5(l) of the FTC Act, 45 U.S.C. § 45(l), as adjusted by 16 CFR
1.98(c)). Given these strong injunctive provisions, the Commission believes that the orders
contain significant relief that will safeguard consumers’ privacy.
Accordingly, the Commission has determined that the public interest would best be served by
issuing the Decisions and Orders in this matter in final form without any modifications. The
final Decisions and Orders and other relevant materials are available from the Commission’s
website at http://www.ftc.gov. It helps the Commission’s analysis to hear from a variety of
sources in its work. The Commission thanks you again for your comment.
By direction of the Commission, Commissioner Wright not participating.
Donald S. Clark
Secretary
1
The proposed orders define “covered rent-to-own transaction” as “any transaction where
a consumer enters into an agreement for the purchase or rental of a computer and the consumer’s
contract or rental agreement provides for payments over time and an option to purchase the
computer.”
Office of the Secretary
United States of America
FEDERAL TRADE COMMISSION
Washington, D.C. 20580
April 11, 2013
Commenters Supporting Stronger Penalties
In the Matter of DesignerWare, LLC; Timothy Kelly and Ronald P. Koller; Aspen Way
Enterprises, Inc.; B. Stamper Enterprises, Inc.; C.A.L.M. Ventures, Inc.; J.A.G. Rents, LLC; Red
Zone, Inc.; Showplace, Inc.; and Watershed Development Corp.
File No. 112 3151, Docket No. C-4390 Through Docket No. C-4398
Thank you for your comment regarding the Federal Trade Commission’s consent agreements in
the above-entitled proceeding. The Commission has placed your comment on the public record
pursuant to Rule 4.9(b)(6)(ii) of the Commission’s Rules of Practice, 16 C.F.R. § 4.9(b)(6)(ii),
and has given it serious consideration.
Your comment urges the Commission to impose stronger penalties on the respondents in this
matter. The Commission is committed to safeguarding consumer privacy and believes the
proposed orders will substantially protect consumers and help deter future privacy violations by
rent-to-own companies (“RTO stores”) using monitoring and/or tracking technologies. The
proposed orders ban DesignerWare and its owners from using or providing third parties with
technology that allows RTO stores to monitor computers rented to consumers. The proposed
orders with the RTO stores similarly ban them from using such technology in connection with a
covered RTO transaction..1
The proposed orders also prohibit DesignerWare, its owners, and the
RTO stores from using geographical tracking technology to gather information from any
computer without providing clear and prominent notice to and obtaining affirmative express
consent from the computer’s renter at the time the computer is rented. Computer users must also
receive clear and prominent notice immediately prior to each time tracking technology is
activated.
In addition, the proposed orders prohibit DesignerWare, its owners, and the RTO stores from the
deceptive collection of consumer information via fake software registration notices. The RTO
stores are also barred from using any information that was improperly gathered from consumers
through any monitoring or tracking software to collect on a consumer rental contract.
DesignerWare, its owners, and the RTO stores must destroy any data that was collected through
any improper use of monitoring or tracking software, and must encrypt any such data that is
collected properly (i.e., pursuant to the requisite notice and consent). Further, the proposed
orders bar misrepresentations about the privacy or security of any personal information gathered
from or about consumers.
The Commission lacks authority to seek civil or criminal penalties for the unlawful conduct
alleged in the complaints. However, should a respondent violate any term of a final order, it
could be liable for civil penalties of up to $16,000 per violation of any term of the order, or up to
$16,000 per day in the case of continuing violations as provided by Section 5(l) of the FTC Act,
45 U.S.C. § 45(l), as adjusted by 16 CFR 1.98(c)). Accordingly, the Commission believes that
these orders will provide strong protections for consumers’ privacy.
In light of these considerations, the Commission has determined that the public interest would
best be served by issuing the Decisions and Orders in this matter in final form without any
modifications. The final Decisions and Orders and other relevant materials are available from
the Commission’s website at http://www.ftc.gov. It helps the Commission’s analysis to hear
from a variety of sources in its work. The Commission thanks you again for your comment.
By direction of the Commission, Commissioner Wright not participating.
Donald S. Clark
Secretary
1
The proposed orders define “covered rent-to-own transaction” as “any transaction where a
consumer enters into an agreement for the purchase or rental of a computer and the consumer’s
contract or rental agreement provides for payments over time and an option to purchase the
computer.”
Office of the Secretary
United States of America
FEDERAL TRADE COMMISSION
Washington, D.C. 20580
April 11, 2013
Commenters Supporting the Use of Monitoring Software
In the Matter of DesignerWare, LLC; Timothy Kelly and Ronald P. Koller; Aspen Way
Enterprises, Inc.; B. Stamper Enterprises, Inc.; C.A.L.M. Ventures, Inc.; J.A.G. Rents, LLC; Red
Zone, Inc.; Showplace, Inc.; and Watershed Development Corp.
File No. 112 3151, Docket No. C-4390 Through Docket No. C-4398
Thank you for your comment regarding the Federal Trade Commission’s consent agreements in
the above-entitled proceeding. The Commission has placed your comment on the public record
pursuant to Rule 4.9(b)(6)(ii) of the Commission’s Rules of Practice, 16 C.F.R. § 4.9(b)(6)(ii),
and has given it serious consideration.
Your comment asserts that one or more of the proposed consent orders in this matter will deprive
owners of rented computers of their ability to locate and retrieve stolen devices. Your comment
also suggests that DesignerWare and rent-to-own (“RTO”) storeowners limited the activation
and use of monitoring technology, such as Detective Mode, to instances where it was necessary
to assist in retrieving a stolen computer. However, as alleged in the Commission’s complaints
against DesignerWare, its owners, and the RTO stores, the circumstances in which Detective
Mode was activated on rented computers was not limited to instances of theft. The complaints
allege that, although DesignerWare recommended that RTO stores install and activate Detective
Mode only to locate and identify the person in possession of a lost or stolen computer, in
numerous instances DesignerWare did not monitor its collection of, or restrict its licensees’
access to, Detective Mode data. Thus, the complaints allege, RTO stores activated monitoring
technology when consumers were late on rental payments and the stores had no reason to believe
the computers had been the subject of criminal theft. Detective Mode enabled RTO stores to
surreptitiously capture highly personal information from consumers who used computers on
which the program was installed. As the Commission’s complaints allege, secretly collecting
private details about individuals and families in their homes can cause consumers substantial
injury.
The Commission believes the proposed orders strike an appropriate balance between protecting
consumer privacy and affirming the ability of these RTO companies to locate stolen property,
using methods that do not place consumers at risk from the disclosure of financial, health, or
other confidential consumer information. The proposed orders ban the respondents’ use of
monitoring technology – such as keystroke logging, taking screenshots of computer users’
activities, and photographing anyone in view of the computer’s camera – in connection with any
covered RTO transaction.1
At the same time, the orders allow them to use geophysical location
tracking technology to aid in locating and recovering stolen computers. Consumer renters must
receive notice of and give their consent to the installation and use of location tracking
technology, and in most instances computer users must receive notice immediately prior to its
activation. The notice requirement may be suspended, however, where the consumer reports the
computer stolen – or there is otherwise a reasonable basis to believe that the computer has been
stolen – and a police report is filed. This provision provides these RTO stores an effective means
to locate and retrieve stolen computers.
In light of these considerations, the Commission has determined that the public interest would
best be served by issuing the Decisions and Orders in this matter in final form without any
modifications. The final Decisions and Orders and other relevant materials are available from
the Commission’s website at http://www.ftc.gov. It helps the Commission’s analysis to hear
from a variety of sources in its work. The Commission thanks you again for your comment.
By direction of the Commission, Commissioner Wright not participating.
Donald S. Clark
Secretary
1
The proposed orders define “covered rent-to-own transaction” as “any transaction where a
consumer enters into an agreement for the purchase or rental of a computer and the consumer’s
contract or rental agreement provides for payments over time and an option to purchase the
computer.” The prohibition on monitoring does not include consumers’ rental of laptops outside
the RTO context, or any business’s use or rental of laptops, and also does not cover the use of
monitoring technology for non-commercial purposes by private persons (e.g., parents monitoring
their children’s computer use).
Office of the Secretary
United States of America
FEDERAL TRADE COMMISSION
Washington, D.C. 20580
April 11, 2013
Commenters Concerned That the Consent Orders Will Increase Consumer Costs
In the Matter of DesignerWare, LLC; Timothy Kelly and Ronald P. Koller; Aspen Way
Enterprises, Inc.; B. Stamper Enterprises, Inc.; C.A.L.M. Ventures, Inc.; J.A.G. Rents, LLC; Red
Zone, Inc.; Showplace, Inc.; and Watershed Development Corp.
File No. 112 3151, Docket No. C-4390 Through Docket No. C-4398
Thank you for your comment regarding the Federal Trade Commission’s consent agreements in
the above-entitled proceeding. The Commission has placed your comment on the public record
pursuant to Rule 4.9(b)(6)(ii) of the Commission’s Rules of Practice, 16 C.F.R. § 4.9(b)(6)(ii),
and has given it serious consideration.
Your comment asserts that one or more of the proposed consent orders in this matter will lead
rent-to-to-own (“RTO”) stores to charge higher prices for renting computers or require
consumers to purchase monitoring software for their rented computers. The Commission
concludes that, based on the facts uncovered during our investigation, the proposed orders are
necessary to protect consumer privacy and help deter future violations of law. The complaints
against DesignerWare, its owners, and the RTO stores allege that respondents licensed, activated,
and surreptitiously used software installed on rented computers to monitor consumers using
rented computers, including by capturing keystrokes, screenshots of computer activities, and
pictures taken by computer webcams. These practices, the complaints charge, caused or were
likely to cause substantial consumer injury. The complaints also allege that the respondents
deceived consumers into providing personal information on fake pop-up software registration
notices. In addition, the DesignerWare complaint alleges that DesignerWare and its owners
harmed consumers by installing geophysical location tracking software on rented computers
without consent from computer renters and contemporaneous notice to computer users.
There is also no reason to believe that the proposed orders will lead RTO stores to raise rental
costs, given that the orders allow stores to locate and retrieve rented computers. Although the
proposed orders ban the respondents from using monitoring technology in connection with any
covered RTO transaction,1
they allow them to use geophysical location tracking technology to
help stores recover computers. Consumer renters must receive notice of and give their consent to
the installation and use of location tracking technology at the time the computer is rented, and in
most instances computer users must receive notice immediately prior to its activation. The
notice requirement may be suspended, however, where the consumer reports the computer stolen
– or there is otherwise a reasonable basis to believe that the computer has been stolen – and a
police report is filed. These provisions provide these RTO stores effective means to locate and
retrieve the computers.
The proposed orders also bar the use of deceptive tactics (including fake software registration
screens) to collect personal information from consumers and prohibit other misrepresentations
about consumer privacy. Similarly, the orders prohibit the use of information gathered from
consumers using deceptive means to collect on consumer rental contracts.
In light of these considerations, the Commission has determined that the public interest would
best be served by issuing the Decisions and Orders in this matter in final form without any
modifications. The final Decisions and Orders and other relevant materials are available from
the Commission’s website at http://www.ftc.gov. It helps the Commission’s analysis to hear
from a variety of sources in its work. The Commission thanks you again for your comment.
By direction of the Commission, Commissioner Wright not participating.
Donald S. Clark
Secretary
1
The proposed orders define “covered rent-to-own transaction” as “any transaction where a
consumer enters into an agreement for the purchase or rental of a computer and the consumer’s
contract or rental agreement provides for payments over time and an option to purchase the
computer.” The prohibition on monitoring does not include consumers’ rental of laptops outside
the RTO context, or any business’s use or rental of laptops, and also does not cover the use of
monitoring technology for non-commercial purposes by private persons (e.g., parents monitoring
their children’s computer use).
Office of the Secretary
United States of America
FEDERAL TRADE COMMISSION
Washington, D.C. 20580
April 11, 2013
Commenters Concerned About Prohibiting the Use of Monitoring Technology
In the Matter of DesignerWare, LLC; Timothy Kelly and Ronald P. Koller; Aspen Way
Enterprises, Inc.; B. Stamper Enterprises, Inc.; C.A.L.M. Ventures, Inc.; J.A.G. Rents, LLC; Red
Zone, Inc.; Showplace, Inc.; and Watershed Development Corp.
File No. 112 3151, Docket No. C-4390 Through Docket No. C-4398
Thank you for your comment regarding the Federal Trade Commission’s consent agreements in
the above-entitled proceeding. The Commission has placed your comment on the public record
pursuant to Rule 4.9(b)(6)(ii) of the Commission’s Rules of Practice, 16 C.F.R. § 4.9(b)(6)(ii),
and has given it serious consideration.
Your comment objects to one of the proposed consent orders in this matter because you believe it
will prohibit the use of monitoring technology on rented computers. According to your
comment, you believe that this technology enables the recovery of stolen computers and that
barring its use will adversely affect consumers.
The Commission concludes that, based on the facts uncovered during our investigation, the
proposed orders in this matter are necessary to protect consumer privacy and help deter future
violations of law. The complaints against DesignerWare, its owners, and the rent-to-own
(“RTO”) stores allege that respondents licensed, activated, and urreptitiously used software
installed on rented computers to monitor consumers using rented computers, including by
capturing keystrokes, screenshots of computer activities, and pictures taken by computer
webcams. These practices, the complaints charge, caused or were likely to cause substantial
consumer injury. The complaints also allege that the respondents deceived consumers into
providing personal information on fake pop-up software registration notices. The complaints
allege that RTO stores did not limit the activation of Detective Mode to instances of theft, but
rather activated monitoring technology when consumers were late on rental payments and the
stores had no reason to believe the computers had been the subject of criminal theft.
The Commission believes the proposed orders strike an appropriate balance between protecting
consumer privacy and affirming the ability of these RTO companies to locate stolen property,
using methods that do not place consumers at risk from the disclosure of financial, health, or
other confidential consumer information. The proposed orders ban the respondents from using
monitoring technology in connection with any covered RTO transaction,1
but allow them to use
geophysical location tracking technology to aid in locating and recovering computers. Consumer
renters must receive notice of and give their consent to the installation and use of location
tracking technology at the time the computer is rented, and in most instances computer users
must receive notice immediately prior to its activation. The notice requirement may be
suspended, however, where the consumer reports the computer stolen – or there is otherwise a
reasonable basis to believe that the computer has been stolen – and a police report is filed. These
provisions provide these RTO stores effective means to locate and retrieve the computers.
The proposed orders also bar the use of deceptive tactics (including fake software registration
screens) to collect personal information from consumers and prohibit other misrepresentations
about consumer privacy. Similarly, the orders prohibit the use of information gathered from
consumers using deceptive means to collect on consumer rental contracts.
In light of these considerations, the Commission has determined that the public interest would
best be served by issuing the Decisions and Orders in this matter in final form without any
modifications. The final Decisions and Orders and other relevant materials are available from the
Commission’s website at http://www.ftc.gov. It helps the Commission’s analysis to hear from a
variety of sources in its work. The Commission thanks you again for your comment.
By direction of the Commission, Commissioner Wright not participating.
Donald S. Clark
Secretary
1
The proposed orders define “covered rent-to-own transaction” as “any transaction where
a consumer enters into an agreement for the purchase or rental of a computer and the consumer’s
contract or rental agreement provides for payments over time and an option to purchase the
computer.” The prohibition on monitoring does not include consumers’ rental of laptops outside
the RTO context, or any business’s use or rental of laptops, and also does not cover the use of
monitoring technology for non-commercial purposes by private persons (e.g., parents monitoring
their children’s computer use).
Office of the Secretary
United States of America
FEDERAL TRADE COMMISSION
Washington, D.C. 20580
April 11, 2013
Tim Kelly
Commonwealth of Pennsylvania
Re: In the Matter of DesignerWare, LLC,
In the Matter of Timothy Kelly and Ronald P. Koller
File No. 112 3151, Docket Nos. C-4390 and C-4391
Dear Mr. Kelly:
Thank you for your comment regarding the Federal Trade Commission’s consent agreements in
the above-entitled proceeding. The Commission has placed your comment on the public record
pursuant to Rule 4.9(b)(6)(ii) of the Commission’s Rules of Practice, 16 C.F.R. § 4.9(b)(6)(ii),
and has given it serious consideration.
Your comment suggests that the proposed consent orders with DesignerWare, LLC
(“DesignerWare”), and its owners, you and Ronald P. Koller, are based on incorrect
assumptions. In particular, you assert that DesignerWare’s monitoring technology, Detective
Mode, could only be installed on rented computers that were reported as “stolen.” Although you
concede that DesignerWare did not “know about how all its licensees used the Detective Mode
program,” you claim “it would not make sense for them to use the software” to monitor
consumers who were late on their payments.
As you know, the Commission conducted a thorough investigation of this matter, including how
DesignerWare’s licensees used Detective Mode. The complaint against DesignerWare is based
on the Commission’s reason to believe that the company engaged in unfair and deceptive
practices in violation of Section 5 the Federal Trade Commission Act, 15 U.S.C. § 45. The
complaint alleges that DesignerWare did not monitor its collection of or limit its licensees’
access to Detective Mode data, which included sensitive consumer information such as
screenshots of medical records, Social Security numbers, and financial account statements and
webcam photos of individuals engaged in personal activities within the presumed privacy of their
own homes. The complaint further alleges that, in numerous instances, RTO stores that licensed
Detective Mode used the program where consumers were late in making rental payments and the
stores had no reason to believe that the computers had been stolen. As you acknowledge,
DesignerWare did not – and, in fact, could not – ensure that Detective Mode data was used only
to locate stolen computers.
The Commission believes the proposed orders strike an appropriate balance between protecting
consumer privacy and affirming the ability of the RTO store respondents to locate stolen
property, using methods that do not place consumers at risk from the disclosure of financial,
health, or other confidential consumer information. The proposed orders ban the respondents’
use of monitoring technology – such as keystroke logging, taking screenshots of computer users’
activities, and photographing anyone in view of the computer’s camera – in connection with any
covered RTO transaction.1
However, they permit the limited use of geophysical location
tracking technology, provided that consumer renters receive notice of and give their consent to
its use, and that computer users receive notice immediately prior to its activation. Further, the
proposed orders recognize that geophysical location tracking technology may legitimately help
find a stolen computer and, accordingly, expressly allow it to be activated without notifying a
computer user where (a) the renter reports that the computer has been stolen or there is otherwise
a reasonable basis to believe that the computer has been stolen, and (b) a police report about the
stolen computer has been filed.
In light of these considerations, the Commission has determined that the public interest would
best be served by issuing the Decisions and Orders in final form without any modifications. The
final Decisions and Orders and other relevant materials are available from the Commission’s
website at http://www.ftc.gov. It helps the Commission’s analysis to hear from a variety of
sources in its work. The Commission thanks you again for your comment.
By direction of the Commission, Commissioner Wright not participating.
Donald S. Clark
Secretary
1 The proposed orders define “covered rent-to-own transaction” as “any transaction where a
consumer enters into an agreement for the purchase or rental of a computer and the consumer’s
contract or rental agreement provides for payments over time and an option to purchase the
computer.” The prohibition on monitoring does not include consumers’ rental of laptops outside
the RTO context, or any business’s use or rental of laptops, and also does not cover the use of
monitoring technology for non-commercial purposes by private persons (e.g., parents monitoring
their children’s computer use).
Office of the Secretary
United States of America
FEDERAL TRADE COMMISSION
Washington, D.C. 20580
April 11, 2013
Charles Douglas
State of Idaho
Re: In the Matter of DesignerWare, LLC, File No. 112 3151, Docket No. C-4390
Dear Mr. Douglas:
Thank you for your comment regarding the Federal Trade Commission’s consent agreement in
the above-entitled proceeding. The Commission has placed your comment on the public record
pursuant to Rule 4.9(b)(6)(ii) of the Commission’s Rules of Practice, 16 C.F.R. § 4.9(b)(6)(ii),
and has given it serious consideration.
Your comment objects to the proposed consent order with DesignerWare, LLC, because it will
prohibit the use of monitoring technology on rented computers. According to your comment,
you were notified when you rented a laptop from a rent-to-own (“RTO”) store that monitoring
software was installed on the computer and that it would only be used if you failed to return the
device at the end of the rental contract term.
The Commission appreciates your comment, but concludes that, based on the facts uncovered
during its investigation, the proposed order is necessary to protect consumer privacy and help
deter future violations of law. The complaints against DesignerWare, its owners, and the RTO
stores allege that they licensed, activated, and surreptitiously used software installed on rented
computers to monitor consumers using rented computers, including by capturing keystrokes,
screenshots of computer activities, and pictures taken by computer webcams. These practices,
the complaints charge, caused or were likely to cause substantial consumer injury. In addition,
the DesignerWare complaint alleges that the company and its owners harmed consumers by
installing geophysical location tracking software on rented computers without consent from
computer renters and contemporaneous notice to computer users. According to the complaints,
in numerous instances, consumers were not informed that their computer use or physical location
would be monitored or tracked in this manner.
The Commission believes the proposed order strikes an appropriate balance between protecting
consumer privacy and affirming the ability of DesignerWare’s licensees to locate stolen property,
using methods that do not place consumers at risk from the disclosure of financial, health, or
other confidential consumer information. The proposed order bans DesignerWare from using
monitoring technology in connection with any covered RTO transaction,1
but it allows the
company to provide its licensees the capacity to use geophysical location tracking technology,
provided that consumer renters receive notice of and give their consent to its use, and that
computer users receive notice immediately prior to its activation. The notice requirement may be
suspended, however, where the consumer reports the computer stolen – or there is otherwise a
reasonable basis to believe that the computer has been stolen – and a police report is filed. These
provisions provide DesignerWare’s licensees with an effective means to locate and retrieve the
computers.
In light of these considerations, the Commission has determined that the public interest would
best be served by issuing the Decision and Order in final form without any modifications. The
final Decision and Order and other relevant materials are available from the Commission’s
website at http://www.ftc.gov. It helps the Commission’s analysis to hear from a variety of
sources in its work. The Commission thanks you again for your comment.
By direction of the Commission, Commissioner Wright not participating.
Donald S. Clark
Secretary
1
“Covered rent-to-own transaction” is defined as “any transaction where a consumer enters into
an agreement for the purchase or rental of a computer and the consumer’s contract or rental
agreement provides for payments over time and an option to purchase the computer.” The
prohibition on monitoring does not include consumers’ rental of laptops outside the RTO
context, or any business’s use or rental of laptops, and also does not cover the use of monitoring
technology for non-commercial purposes by private persons (e.g., parents monitoring their
children’s computer use).
Office of the Secretary
United States of America
FEDERAL TRADE COMMISSION
Washington, D.C. 20580
April 11, 2013
Martin Emory
State of Florida
Re: In the Matter of DesignerWare, LLC, File No. 112 3151, Docket No. C-4390
Dear Mr. Emory:
Thank you for your comment regarding the Federal Trade Commission’s consent agreement in
the above-entitled proceeding. The Commission has placed your comment on the public record
pursuant to Rule 4.9(b)(6)(ii) of the Commission’s Rules of Practice, 16 C.F.R. § 4.9(b)(6)(ii),
and has given it serious consideration.
Your comment expresses concerns about a software product manufactured by a different
company than DesignerWare, LLC, which you believe can surreptitiously monitor a consumer’s
computer use when installed on that device. You recommend that, instead of issuing the
proposed order, the Commission investigate the manufacturer of this competing software, which
is used by the rent-to-own (“RTO”) store from which you are leasing a computer. You also
question how a software manufacturer may be held liable for unlawful use of its product by a
third party.
The Commission appreciates your comment and your concern about the RTO industry’s use of
monitoring technology on rented computers. The Commission takes seriously these concerns, as
evidenced by the coordinated enforcement actions in this matter against not only DesignerWare
and its principals, Timothy Kelly and Ronald P. Koller, but also against seven RTO companies:
Aspen Way Enterprises, Inc.; B. Stamper Enterprises, Inc.; C.A.L.M. Ventures, Inc.; J.A.G.
Rents, LLC; Red Zone Investment Group, Inc.; Showplace, Inc.; and Watershed Development
Corporation. All of these companies, which collectively operate RTO stores throughout the
country, have agreed to settle charges similar to those brought against DesignerWare and its
principals. We hope these orders have a deterrent effect on other RTO stores as well.
The Commission concludes that, based on the facts uncovered during our investigation, the
proposed order with DesignerWare will strongly protect consumers from the unwarranted
disclosure of financial, health, or other confidential information. As the complaint against
DesignerWare alleges, the company’s role involved more than the development and sale of
software. An RTO store that licensed DesignerWare’s monitoring software, PC Rental Agent,
could activate the program’s “Detective Mode” by accessing DesignerWare’s website, enabling
the program to run on a computer on which it was installed. DesignerWare’s servers collected
the data captured by Detective Mode and then emailed it to the RTO store. Without
DesignerWare providing RTO stores with access to its web portal and providing servers to
support both PC Rental Agent and Detective Mode, the collection and disclosure of consumers’
private information would not have been possible.
DesignerWare played a similarly active role in the use of the geophysical location tracking
technology that it made available to PC Rental Agent licensees in 2011. As alleged in the
Commission’s complaint against DesignerWare, a computer on which PC Rental Agent is
installed reports to DesignerWare’s servers the location of WiFi hotspots the computer
encounters, along with the computer’s IP address. DesignerWare makes this information easily
available to RTO store licensees by cross-referencing a list of publicly available WiFi hotspots
with the street addresses for the particular hotspots viewed or accessed by rented computers.
With respect to your concern about the competing software product used by RTO stores to
surreptitiously monitor consumer activities on rented computers, the settlements with
DesignerWare, its principals, and the RTO companies do not preclude the Commission from
taking future action against other companies whose practices violate Section 5 of the Federal
Trade Commission Act (“FTC Act”) or other laws it enforces. To the extent you would like to
provide further information about specific industry practices that you believe are unlawful, we
encourage you to file a complaint with the Commission’s Consumer Response Center.
Complaints filed with the Commission are part of the Consumer Sentinel database and provide
an important source of information for the Commission and hundreds of other federal and state
law enforcement agencies. You may file a complaint at https://www.ftccomplaintassistant.gov/.
In light of these considerations, the Commission has determined that the public interest would
best be served by issuing the Decision and Order against DesignerWare in final form without any
modifications. The final Decision and Order and other relevant materials are available from the
Commission’s website at http://www.ftc.gov. It helps the Commission’s analysis to hear from a
variety of sources in its work. The Commission thanks you again for your comment.
By direction of the Commission, Commissioner Wright not participating.
Donald S. Clark
Secretary
Office of the Secretary
United States of America
FEDERAL TRADE COMMISSION
Washington, D.C. 20580
April 11, 2013
Gregory
State of Colorado
Re: In the Matter of DesignerWare, LLC, File No. 112 3151, Docket No. C-4390
Dear Sir or Madam:
Thank you for your comment regarding the Federal Trade Commission’s consent agreement in
the above-entitled proceeding. The Commission has placed your comment on the public record
pursuant to Rule 4.9(b)(6)(ii) of the Commission’s Rules of Practice, 16 C.F.R. § 4.9(b)(6)(ii),
and has given it serious consideration.
Your comment suggests that the proposed orders with DesignerWare, LLC, and its principals
will have a limited impact on the market for monitoring technology that can be used on rented
computers. You claim that other software manufacturers continue to market products similar to
DesignerWare’s program and that “99% of the industry [will] go[] unchanged” as a result of the
Commission’s actions.
The Commission appreciates your comment and your concern about the rent-to-own (“RTO”)
industry’s use of monitoring technology on rented computers. The Commission takes seriously
these concerns, as evidenced by the coordinated enforcement actions in this matter against not
only DesignerWare and its principals, but also against seven RTO companies: Aspen Way
Enterprises, Inc.; B. Stamper Enterprises, Inc.; C.A.L.M. Ventures, Inc.; J.A.G. Rents, LLC; Red
Zone Investment Group, Inc.; Showplace, Inc.; and Watershed Development Corporation. All of
these companies, which collectively operate RTO stores throughout the country, have agreed to
settle charges similar to those brought against DesignerWare and its principals. We hope these
orders have a deterrent effect on other RTO stores as well.
In addition, the settlements with DesignerWare, its principals, and the RTO companies do not
preclude the Commission from taking future action against other companies whose practices
violate Section 5 of the Federal Trade Commission Act (“FTC Act”) or other laws it enforces.
To the extent you would like to provide further information about specific industry practices that
you believe are unlawful, we encourage you to file a complaint with the Commission’s
Consumer Response Center. Complaints filed with the Commission are part of the Consumer
Sentinel database and provide an important source of information for the Commission and
hundreds of other federal and state law enforcement agencies. You may file a complaint at
https://www.ftccomplaintassistant.gov/.
In light of these considerations, the Commission has determined that the public interest would
best be served by issuing the Decision and Order against DesignerWare in final form without any
modifications. The final Decision and Order and other relevant materials are available from the
Commission’s website at http://www.ftc.gov. It helps the Commission’s analysis to hear from a
variety of sources in its work. The Commission thanks you again for your comment.
By direction of the Commission, Commissioner Wright not participating.
Donald S. Clark
Secretary
Office of the Secretary
United States of America
FEDERAL TRADE COMMISSION
Washington, D.C. 20580
April 11, 2013
Martin
State of Michigan
Re: In the Matter of DesignerWare, LLC, File No. 112 3151, Docket No. C-4390
Dear Sir or Madam:
Thank you for your comment regarding the Federal Trade Commission’ s consent agreement in
the above-entitled proceeding. The Commission has placed your comment on the public record
pursuant to Rule 4.9(b)(6)(ii) of the Commission’ s Rules of Practice, 16 C.F.R. § 4.9(b)(6)(ii),
and has given it serious consideration.
Your comment objects to the proposed consent order with DesignerWare, LLC, because it will
prohibit the use of monitoring technology, a product you have found useful in your experience as
a rent-to-own (“ RTO” ) professional to recover rented computers. According to your comment,
monitoring has helped your RTO business reduce charge-offs of unreturned computers. You also
state that your practice has been to notify consumers about the use of this technology, asserting
that consumers were unable to use a rented computer until they agreed to be tracked and
monitored if they failed to return the device.
The Commission appreciates your comment, but concludes that, based on the facts uncovered
during its investigation, the proposed order is necessary to protect consumer privacy. The
complaints against DesignerWare, its owners, and the RTO stores allege that respondents
licensed, activated, and surreptitiously used software installed on rented computers to monitor
consumers using rented computers, including by capturing keystrokes, screenshots of computer
activities, and pictures taken by computer webcams. These practices, the complaints charge,
caused or were likely to cause substantial consumer injury. According to the complaints, in
numerous instances, consumers were not informed that their computer use would be monitored in
this manner.
In addition, the DesignerWare complaint alleges that the company and its owners harmed
consumers by installing geophysical location tracking software on rented computers without
consent from computer renters and contemporaneous notice to computer users. The orders
against DesignerWare and the RTO store respondents require that consumer renters receive
notice of and give their consent to the installation and use of location tracking technology at the
time the computer is rented, and in most instances computer users must receive notice
immediately prior to its activation. The notice requirement may be suspended, however, where
the consumer reports the computer stolen or there is otherwise a reasonable basis to believe that
the computer has been stolen and a police report is filed. These provisions provide the RTO
stores effective means to locate and retrieve the computers. Although your comment suggests
that “ geolocation technology” is worthless because, as distinguished from GPS, it can only
identify the general” location of a computer, the proposed orders explicitly contemplate that,
subject to the protections in the proposed orders, the respondents may use GPS or other
technologies that collect and report data or information that identifies the precise geophysical
location of a computer. To the extent that the RTO store respondents have not used such
tracking technology, the proposed orders will ensure that they do not begin tracking rented
computers (using GPS or another method) without appropriate safeguards.
In light of these considerations, the Commission has determined that the public interest would
best be served by issuing the Decision and Order in final form without any modifications. The
final Decision and Order and other relevant materials are available from the Commission’s
website at http://www.ftc.gov It helps the Commission's analysis to hear from a variety of
sources in its work. The Commission thanks you again for your comment.
By direction of the Commission, Commissioner Wright not participating.
Donald S. Clark
Secretary
Office of the Secretary
United States of America
FEDERAL TRADE COMMISSION Washington, D.C. 20580
April 11, 2013
Westmoreland
Commonwealth of Pennsylvania
Re: In the Matter of DesignerWare, LLC, File No. 112 3151, Docket No. C-4390
Dear Sir or Madam:
Thank you for your comment regarding the Federal Trade Commission’s consent agreement in
the above-entitled proceeding. The Commission has placed your comment on the public record
pursuant to Rule 4.9(b)(6)(ii) of the Commission’s Rules of Practice, 16 C.F.R. § 4.9(b)(6)(ii),
and has given it serious consideration.
Your comment objects to the proposed consent order with DesignerWare, LLC, because it will
prohibit the use of monitoring technology on rented computers. According to your comment, “it
is impossible” for a consumer who leases a computer from a rent-to-own (“RTO”) store to be
unaware that the store may monitor them through the computer’s webcam. You also dispute
more generally allegedly “false and misleading” statements presumably in the Commission’s
complaint against DesignerWare and related materials about this matter on the Commission’s
website.
The Commission appreciates your comment, but concludes that, based on the facts uncovered
during its investigation, the proposed order is necessary to protect consumer privacy. The
complaints against DesignerWare, its owners, and the RTO stores allege that respondents
licensed, activated, and surreptitiously used software installed on rented computers to monitor
consumers using rented computers, including by capturing keystrokes, screenshots of computer
activities, and pictures taken by computer webcams. These practices, the complaints charge,
caused or were likely to cause substantial consumer injury. In addition, the DesignerWare
complaint alleges that the company and its owners harmed consumers by installing geophysical
location tracking software on rented computers without consent from computer renters and
contemporaneous notice to computer users. According to the complaints, in numerous instances,
consumers were not informed that their computer use would be monitored in this manner.
In light of these considerations, the Commission has determined that the public interest would
best be served by issuing the Decision and Order in final form without any modifications. The
final Decision and Order and other relevant materials are available from the Commission’s
website at http://www.ftc.gov. It helps the Commission’s analysis to hear from a variety of
sources in its work. The Commission thanks you again for your comment.
By direction of the Commission, Commissioner Wright not participating. Donald S. Clark
Secretary
Office of the Secretary
United States of America
FEDERAL TRADE COMMISSION
Washington, D.C. 20580
April 11, 2013
Jon Albert
State of Illinois
Re: In the Matter of DesignerWare, LLC, File No. 112 3151, Docket No. C-4390
Dear Mr. Albert:
Thank you for your comment regarding the Federal Trade Commission’s consent agreement in
the above-entitled proceeding. The Commission has placed your comment on the public record
pursuant to Rule 4.9(b)(6)(ii) of the Commission’s Rules of Practice, 16 C.F.R. § 4.9(b)(6)(ii),
and has given it serious consideration.
Your comment asserts that the proposed consent order with DesignerWare, LLC
(“DesignerWare”) will deprive rent-to-own (“RTO”) stores of their ability to locate and retrieve
stolen computers, a service you have found helpful to your business. You note that it has been
your practice to inform your employees about the presence of monitoring software on laptop
computers that you lease from an RTO store for your employees. Your comment does not
address the potential risks of exposing confidential information about your business and
customers to third-party RTO store employees using monitoring software installed on rented
laptops.
The Commission’s complaint against DesignerWare and its owners alleges that Detective Mode
was activated on rented computers for purposes other than locating stolen computers. According
to the complaint, DesignerWare did not limit Detective Mode use to instances of theft and, in
many instances, RTO stores used the software where consumers were late on making rental
payments but where the stores had no reason to believe that the computers had been stolen. The
complaint also alleges that DesignerWare did not require or ensure that consumers who rented
computers from RTO stores that activated geophysical location tracking software received notice
that the software was installed on those devices and, in many instances, RTO stores did not
disclose that fact to consumer renters. As the Commission’s complaint alleges, secretly
collecting such data can cause consumers substantial injury, including the unwanted capture of
private details about individuals and families at home.
The Commission believes the proposed settlement with DesignerWare strikes an appropriate
balance between protecting consumer privacy and affirming the ability of the RTO store
respondents to locate stolen property, using methods that do not place consumers at risk from the
disclosure of financial, health, or other confidential consumer information. The proposed order
bans DesignerWare from using monitoring technology – such as keystroke logging, taking
screenshots of computer users’ activities, and photographing anyone in view of the computer’s
camera – in connection with any covered RTO transaction.1
At the same time, the order allows
the company to use geophysical location tracking technology, provided that consumer renters
receive notice of and give their consent to its use, and that computer users receive notice
immediately prior to its activation. This notice requirement may be suspended where the
consumer reports the computer stolen – or there is otherwise a reasonable basis to believe that the
computer has been stolen – and a police report is filed. This provision provides DesignerWare’s
licensees with an effective means to locate and retrieve stolen computers.
In light of these considerations, the Commission has determined that the public interest would
best be served by issuing the Decision and Order in final form without any modifications. The
final Decision and Order and other relevant materials are available from the Commission’s
website at http://www.ftc.gov. It helps the Commission’s analysis to hear from a variety of
sources in its work. The Commission thanks you again for your comment.
By direction of the Commission, Commissioner Wright not participating.
Donald S. Clark
Secretary
1 “Covered rent-to-own transaction” is defined as “any transaction where a consumer enters into
an agreement for the purchase or rental of a computer and the consumer’s contract or rental
agreement provides for payments over time and an option to purchase the computer.” The
prohibition on monitoring does not include consumers’ rental of laptops outside the RTO context,
or any business’s use or rental of laptops, and also does not cover the use of monitoring
technology for non-commercial purposes by private persons (e.g., parents monitoring their
children’s computer use).
Office of the Secretary
United States of America
FEDERAL TRADE COMMISSION
Washington, D.C. 20580
April 11, 2013
Marc Rotenberg, Executive Director
David Jacobs, Consumer Protection Counsel
Julia Horowitz, Fellow
Electronic Privacy Information Center
Washington, DC 20009
In the Matter of DesignerWare, LLC; Timothy Kelly and Ronald P. Koller; Aspen Way
Enterprises, Inc.; B. Stamper Enterprises, Inc.; C.A.L.M. Ventures, Inc.; J.A.G. Rents, LLC; Red
Zone, Inc.; Showplace, Inc.; and Watershed Development Corp.
File No. 112 3151, Docket No. C-4390 Through Docket No. C-4398
Dear Mr. Rotenberg, Mr. Jacobs, and Ms. Horowitz:
Thank you for your comment, on behalf of the Electronic Privacy Information Center (“EPIC”),
regarding the Federal Trade Commission’s consent agreements in the above-entitled proceeding.
The Commission has placed your comment on the public record pursuant to Rule 4.9(b)(6)(ii) of
the Commission’s Rules of Practice, 16 C.F.R. § 4.9(b)(6)(ii), and has given it serious
consideration.
The Commission appreciates your interest in this matter and support of the proposed consent
agreements with DesignerWare, LLC, and other above-referenced respondents (collectively “the
Companies”). The Commission is committed to protecting consumer privacy and believes the
proposed orders will substantially protect consumers and promote effective deterrence regarding
the use of monitoring and/or tracking technology by rent-to-own companies (“RTO stores”).
The proposed orders with DesignerWare and its owners ban them from using or providing third
parties with technology that allows RTO stores to monitor consumer use of rented computers.
The proposed RTO store orders similarly ban the stores from using such technology in
connection with covered RTO transactions. The proposed orders also prohibit the Companies
from using geographical tracking technology to gather information from any rented computer
without providing clear and prominent notice to and obtaining affirmative express consent from
the computer’s renter at the time the computer is rented. Computer users must also receive clear
and prominent notice immediately prior to each activation of tracking technology.
Your comment makes three recommendations, two regarding the terms of the proposed orders
and one broader proposal about additional Commission action to protect the privacy interests of
low-income consumers. With respect to your recommendations concerning the proposed orders,
EPIC suggests that the Companies be required to implement Fair Information Practices (“FIPs”)
similar to those set forth in the White House’s Consumer Privacy Bill of Rights (“CPBR”). You
also recommend that the final orders make publicly available the Companies’ compliance
reports.
EPIC acknowledges that the terms of the proposed orders do much to inhibit future instances of
the “commercial surveillance” practices in which the Companies engaged.
However, you recommend that the orders will better protect consumer privacy if they require the
Companies to implement FIPs, including Respect for Context; Security; Access and Accuracy;
and Accountability. The proposed orders already contain provisions that will prohibit the
gathering of consumer data using the monitoring practices challenged in the Commission’s
complaints, limit the use of geophysical location tracking technology, and require the destruction
of illegally collected information. The orders effectively curtail the unlawful conduct alleged in
the Commission’s complaints and broadly prohibit misrepresentations about privacy to
consumers in connection with covered RTO transactions. We believe that these protections will
adequately deter the Companies from engaging in the alleged unlawful conduct. As the
Commission has noted previously, the orders are designed to address specific conduct alleged in
the complaints and not to impose obligations that may not be tied to such conduct.1
You also ask the Commission to make public the compliance reports required by the orders to
the greatest extent possible. As the Commission has noted previously, it recognizes the public
interest in transparency regarding a company’s compliance with an FTC order.2
The public may
seek access to the compliance reports required by these orders by making a request under the
Freedom of Information Act.3
However, the compliance reports may contain trade secrets or
other confidential commercial or financial information, or information about consumers or other
third parties, that the Commission may not publicly disclose.4
Upon receipt of a request for
confidential treatment of all or part of any compliance reports, the Commission will conduct a
careful review to determine whether confidential treatment is warranted, and make every effort
to be transparent, consistent with applicable law. If the Commission determines that the reports
have been frequently requested or are likely to be frequently requested because of their subject
matter, the agency will post such portions as may be released to the public on the FTC’s website.
Finally, you note that “[RTO] companies are debt traps for low-income and disadvantaged
consumers,” and request that the Commission further investigate the connection between privacy
and poverty. We are cognizant of the consumer protection issues associated with RTO
transactions, and the Commission’s complaints against DesignerWare and the RTO stores
acknowledge and address the connection between their allegedly privacy-invasive conduct and
their collection practices.5
You specifically recommend that the Commission convene a
workshop to explore how industry privacy practices may disproportionately affect low-income
consumers. The Commission appreciates your attention to these issues. Protecting economically
disadvantaged consumers and fighting the “last-dollar frauds” that target them are important
priorities for the Commission, as evidenced by our enforcement actions in numerous areas,
including privacy,6
debt collection,7
loan modifications,8
and business opportunities.9
We will
continue to vigorously protect our nation’s most vulnerable consumers. Considerations
regarding the privacy implications of business practices that affect these populations are an
important component of our efforts.
In light of these considerations, the Commission has determined that the public interest would
best be served by issuing the Decisions and Orders in final form without modifications.
The final Decisions and Orders and other relevant materials are available from the Commission’s
website at http://www.ftc.gov. It helps the Commission’s analysis to hear from a variety of
sources in its work. The Commission thanks you again for your comment.
By direction of the Commission, Commissioner Wright not participating.
Donald S. Clark
Secretary
1
Letter from Donald S. Clark, Secretary, Fed. Trade Comm’n, to Marc Rotenberg et. al (Aug.
30, 2012), available at http://ftc.gov/os/caselist/1023058/120911myspaceletterepic.pdf.
2 Id.
3 5 U.S.C. § 552 et seq (“FOIA”). As you note, the Commission has approved FOIA requests
for reports submitted pursuant to consent agreements entered in other matters. See, e.g., Letter
from Sarah Mathias, Associate General Counsel, Fed. Trade Comm’n, to Ginger McCall,
Director, EPIC Open Gov’t Program (Feb. 15, 2012), available at
https://epic.org/privacy/ftc/google/EPIC-FTC-Google-Compliance-Reply-02-17-12.pdf.
4 See 15 U.S.C. § 46(f) (“the Commission shall not have any authority to make public any trade
secret or any commercial or financial information which is obtained from any person and which
is privileged or confidential”); Commission Rule of Practice § 4.10.
5 The RTO store complaints allege that their use of information improperly gathered from
consumers to collect on rental contracts was unfair, while the DesignerWare complaint alleges
that the company and its principals provided their licensees with the means to engage in this
unfair conduct.
6 See, e.g, United States v. PLS Fin. Serv., Case No. 1:12-cv-08334 (N.D. Ill. settlement filed
Oct. 26, 2012) (data security and disposal practices of a consumer finance company whose
services included payday loans, check cashing, automobile title loans, and phone cards); Equifax
Information Servs. LLC, FTC Docket No. C-4387 (Mar. 5, 2013) (final consent order) (improper
sale of prescreened lists of homeowners delinquent on mortgage payments that marketers then
used to pitch debt relief and loan modification programs to these financially distressed
consumers); United States v. Direct Lending Source, Inc., Case No. 12-CV-2441-DMS-BLM
(S.D. Cal. settlement filed Oct. 11, 2012) (same).
7 See, e.g., FTC v. Forensic Case Mgmt. Servs., Inc., Case No. CV-11-7484 (C.D. Cal.
settlement filed Jan. 4, 2013) (illegal debt collection practices, including the improper disclosure
of consumers’ debts to their employers, neighbors, and other third parties); FTC v. Asset
Acceptance LLC, Case No. 9:12-CV-182-T-27EAJ (M.D. Fla. consent decree filed Jan. 12, 2012)
(collection of time-barred debts and other debt collection practices).
8 See, e.g., FTC v. Consumer Advocates Group Experts, LLC, Case No. CV12-04736 DDP (C.D.
Cal. settlement filed Feb. 7, 2013) (bogus mortgage modification and forensic audit services
marketed to vulnerable homeowners); FTC v. Freedom Cos. Mktg., Case No. 12cv5743 (N.D. Ill.
filed July 23, 2012) (nationwide mortgage assistance relief scam targeting Spanish-speaking
homeowners).
9 For example, the FTC recently announced seven cases against deceptive business opportunity
schemes as part of a coordinated group of more than seventy actions brought by federal and state
law enforcement agencies. See http://www.ftc.gov/opa/2012/11/lostopp.shtm.