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Entrepreneurs Behaving Badly

Sometimes customers do things that make you want to take extreme actions. But there's no good excuse for going this far.

Every once in a while, a company does something that leaves you puzzled. And then there are incidents that fall into the what-in-the-world-were-they-thinking category. This is one of those stories.

A software vendor and a few companies that offer rent-to-own programs for PCs all recently settled a Federal Trade Commission complaint. The topic? Spying on consumers through key stroke logging and surreptitious remote use of webcams. Here's a description from the FTC press release announcing the settlement:

Data gathered by [software vendor] DesignerWare and provided to rent-to-own stores using Detective Mode revealed private and confidential details about computer users, such as user names and passwords for email accounts, social media websites, and financial institutions; Social Security numbers; medical records; private emails to doctors; bank and credit card statements; and webcam pictures of children, partially undressed individuals, and intimate activities at home, according to the FTC.

Let that sink in for a moment. According to the FTC allegations, these companies collectively gathered sensitive personal information that would provide a field day to anyone attempting identity theft. But that wasn't the end of it. They collected images of "children, individuals not fully clothed, and couples engaged in sexual activities."

There was also a kill switch that allowed the retailers to shut down a computer if they thought that a customer missed payments. A fake registration screen also supposedly tricked customers into providing their contact information. Geolocation capabilities built into the software allegedly could track where people were.

Agreed to settle? The entrepreneurs were lucky they could get away with what was essentially a slap on the wrist, given the number of laws they may have broken.

The question is, why would any of these companies take such outrageous actions? The reason is simple: They supposedly wanted to be sure they could collect money owed them.

Granted, running a company can be tough, and there are few things more infuriating than when customers try to duck paying, even though you're already out of pocket the cost of what you provided and the overhead that went into servicing the customer. But, good lord, no matter what, you still have to use some common sense.

Why did they assume that they couldn't be caught? One problem on one computer brought into a technician would likely highlight the offending software. Then it's a trip to the Web to find out what it is and, lo-and-behold, you know who had to be spying.

More importantly, what do such entrepreneurs think that running a business is about? There are times you'll get scammed and injured. But it's the part of business called risk management.

The minute you take this type of action, you forget that the new secret of success is treating your customers with respect. Not all will return it, but use that as an excuse and you can kiss your business goodbye. The Golden Rule of doing unto others as you would have them do unto you is not some idle time-filler for Sunday school. It describes a universal law that you might also put like this: Treat people badly and you're asking them to do the same in return.

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Last updated: Sep 28, 2012

ERIK SHERMAN | Columnist

Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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