It's a question of the laws of the country you are in, for sure. But overall I
think that by actively cracking the wep or wpa or whatever encryption, you are
treading on thin ice, if not breaking the law altogether. My brief google
didn't reveal any specific examples, but based on what I already have learned
about the law and how it applies (at least in the US), I would say that
eavesdropping on UNENCRYPTED wireless communications is ok. By failing to use
encryption, the people are, as you say, giving up their expectation of privacy.
Especially given the fact that wireless communications are a bit ubiquitous due
to their nature.
However, the line gets drawn once they are using encryption. They have taken a
step to provide a measure of privacy (even while using something as broken as
wep) and by actively trying to surpass that, I think you may be in a bit of
danger. Although I don't know for sure. Hopefully someone else can give us more
legal reference.
Regardless, this is a bad idea and I would highly recommend NOT doing this
for/against anyone that isn't paying you and has given you a sign "get out of
jail" letter. You have rightly dismissed this one.
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