The Washington Post reports that when a high school classmate of Cassidy Wolf (aka Miss Teen USA) spied on her via the iSight camera in her MacBook, he did so using software that allowed him to keep the green indicator light off while viewing.
Researchers at Johns Hopkins University were able to replicate the exploit, demonstrated in the above video, but only on MacBook and iMac models released before 2008.
Stephen Checkoway, a computer science professor at Johns Hopkins and a co-author of the study. “Apple went to some amount of effort to make sure that the LED would turn on whenever the camera was taking images,” Checkoway says. The 2008-era Apple products they studied had a “hardware interlock” between the camera and the light to ensure that the camera couldn’t turn on without alerting its owner [...]
In a paper called “iSeeYou: Disabling the MacBook Webcam Indicator LED,” Brocker and Checkoway describe how to reprogram the iSight camera’s micro-controller to allow the camera and light to be activated independently. That allows the camera to be turned on while the light stays off.
While this particular exploit appears limited to older Macbooks, it was recently revealed through court papers that the FBI has the ability to do the same thing with a variety of current laptops including Apple products.