Kobos terms of service
Here's something I found at the end of their terms of service:
"With respect to Registered Users who utilize a Kobo eReader device, Kobo reserves the right to display advertisements and offers on your device. These advertisements and offers may be displayed when the device is powered off or in sleep mode, at the bottom of the home screen, as a screensaver, or through other areas in the user interface as Kobo may choose.
Kobo reserves the right to alter the software of any Kobo eReader device, including enhancements, bug fixes, etc., at any time and in Kobo's sole discretion."
Does the Kobo show ads when powered off? If not it looks like they have the right to update the firmware to do that.
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