When is it ethical/legal to use a service like luckyorange.com?

As the Creator of Lucky Orange I'm a bit biased. The goal of the tool is to help figure out problem areas on your site so you can fix them and IMPROVE your customer's experience. That being said you are required to tell your visitors that you perform this kind of tracking in your privacy policy. We are working on creating a wizard to help generate that for you, but in the meantime you still need to tell your visitors how you are tracking them.

Lucky Orange will let you turn off certain features for improved privacy. You can:

• Disable Mouse Tracking
• Disable Mouse Clicking
• Disable Key Logging
• Disable Scroll Logging

It's also worth noting that certain fields are NEVER logged such as password fields or fields that "look" like credit card data. As well, you can mark any input field as "Sensitive" by adding the classname "LuckySensitive" to it and then that data is never sent to our servers.

http://www.briangruber.com/ is where it's from, and I don't think there's any problem AS LONG AS you tell your visitors so in a Privacy Policy. I personally don't think it's ethical, but there are no laws against it to my knowledge. http://www.luckyorange.com/privacy.php