A number of Australian computer rental businesses have admitted installing a "spyware" software on the laptops they rent out to customers, but argued these were intended only for security purposes, and that it never activated the supposed spy functions of the software.

The U.S. Federal Trade Commission (FTC) is currently tracking businesses and enterprises that used the software PC Rental Agent which has been unlawfully used in the U.S. by computer rental companies to capture webcam images of people's intimate moments. It likewise has been utilised to gather customers' private information such as bank details and passwords.

Computer rental company Rentasaurus admitted installing the PC Rental Agent software, but only to ensure it would be able to collect back its rented units from errant customers.

"We have had customers that have taken our equipment and done a runner," Vikram Kanyalkarm, Rentasaurus' procurement and acquisition manager, told The Sydney Morning Herald.

Created by DesignerWare, a Pennsylvania-based software maker, along with seven other computer rental companies in the U.S., the PC Rental Agent, apart from tracking the computers' locations whenever rented to costumers, also allegedly can take screenshots of personal financial and medical information of consumers, record their keystrokes, and take webcam pictures of consumers in their homes, Bloomberg BNA reported.

At least 420,000 computer units worldwide have been found installed with the software spyware, the FTC said. Some 1,617 rental stores in the United States, Canada and Australia, Rentasaurus included, have been using the software as of August 2011.

Admitting to installing the software without the knowledge of its customers, the software has been particularly helpful in automatically locking the computers if clients didn't pay their dues. It has also been useful in protecting a computer's data should it be stolen. This has been going on for the past two-and-a-half years.

While the software is present in the rented computer units, its customers were never given knowledge that it exists.

"We don't specifically give them any documentation to say it's been put on there," Mr Kanyalkarm said.

"But we don't use it to track any information on a customer's computer," he said, noting Rentasaurus did not activate any invasive features but only what was essential for the business.

"There are other features on it," he admitted. But these had to be allowed and manually activated. They were never on by default, Mr Kanyalkarm maintained.

"Whether they use the (spyware) functionality or not, it doesn't matter," said Jon Lawrence, executive officer at online users' lobby Electronic Frontiers Australia, said in The Sydney Morning Herald.

"The fact that it's there means it is a security and privacy risk."

"The customer becomes aware if you activate those features," Mr Kanyalkarm said. "The rental company can turn them on after installing the software but as far as I know the person on the other end needs to give some sort of permission."