North East Pennsylvania-based software maker DesignerWare and seven rent-to-own companies have worked out an agreement with the Federal Trade Commission (FTC) to settle charges pertaining to use of illegal spyware on rental computers for taking pictures of the oblivious users.

According to FTC's complaint, the illegal spyware - known as Detection Mode - secretly turned on the webcams of the users' computers, and clicked pictures of "children, individuals not fully clothed, and couples engaged in sexual activities"; and transmitted the information to DesignerWare, which, in turn, transmitted it to the rent-to-own stores from which the computer were rented.

As per the complaint, the Detection Mode software was capable of logging the keystrokes of the computer users, taking screen shots of their activities on the computer, and clicking pictures of anyone within the webcam's view.

The Tuesday settlement which FTC worked out with DesignerWare and seven rent-to-own companies - Aspen Way Enterprises; Watershed Development; Showplace; J. A. G. Rents; Red Zone; B. Stamper Enterprises; and C. A. L. M. Ventures - essentially requires the discontinuation of the use of illegal spyware that has apparently been employed on approximately 420,000 rented computers.

Noting that the settlement still allows the companies to use tracking software on their rental computers, provided that they inform renters, FTC spokeswoman Claudia Bourne Farrell said that the companies could get away without any penalty because the FTC is not authorized to "impose civil fines for the first violation of the FTC Act."