I know someone whose camera and microphone were taken over. A window showed on her computer where the person watching her chatted with her and told her things that he only knew because he was watching her. It scared her to death and made her cry.

Beyond blackmail, it is probably close to the psychological equivalent of a stranger just suddenly appearing in your home watching you.

I think that every electronic camera and mic device should have a hard switch/button that physically disables both the camera and mic. Having to use tape or a cover does not keep you from being spied on; it only eliminates the visual spying. The attacker can still listen.