Commentary

FTC Head Warns Of Privacy Risks Posed By Internet Of Things

The Internet of Things might offer benefits to consumers, but also carries “significant privacy and security implications,” Federal Trade Commission Chairwoman Edith Ramirez said today at the Consumer Electronics Show in Las Vegas.

"Connected devices that provide increased convenience and improved health services are also collecting, transmitting, storing, and often sharing vast amounts of consumer data, some of it highly personal, thereby creating a number of privacy risks,” she wrote in the prepared version of a speech she delivered this afternoon.

Your smart TV and tablet may track whether you watch the history channel or reality television, but will your TV-viewing habits be shared with prospective employers or universities?” she asked. “Will they be shared with data brokers, who will put those nuggets together with information collected by your parking lot security gate, your heart monitor, and your smart phone? And will this information be used to paint a picture of you that you will not see but that others will -- people who might make decisions about whether you are shown ads for organic food or junk food, where your call to customer service is routed, and what offers of credit and other products you receive?”

Ramirez and other regulators at the FTC conducted a workshop about the potential privacy risks posed by the Internet of Things in late 2013, and the agency is expected to release a report soon.

Meanwhile, Ramirez had some specific advice for tech companies. Among other recommendations, she said that companies should minimize the amount of data they gather. “Companies should collect only the data needed for a specific purpose and then safely dispose of it afterwards,” she said. “Data that has not been collected or that has already been destroyed cannot fall into the wrong hands.”

The FTC chief also said that companies should provide “clear and simple” notifications about any unexpected uses of data. “Consumers know ... that a fitness band is collecting data about their physical activity. But would they expect this information to be shared with data brokers or marketing firms? Probably not,” she said.

Already, some research by privacy compliance company TRUSTe suggests that privacy fears are preventing people from purchasing “smart” devices, including smart TVs, in-car navigation systems and fitness trackers.

A survey of 1,000 U.S. adults, recently conducted on behalf of TRUSTe by Ipsos MORI, revealed that around two-thirds of adults don't own smart TVs, in-car navigation systems or other non-phone smart devices.

One factor holding back many of those people relates to privacy: twenty-seven percent of respondents said they hadn't purchased a smart device due to fears relating to the security or privacy of data collected by the devices.

The survey results also suggest that even people who own smart devices have privacy concerns about them. Consider, the vast majority of respondents (79%) said they were concerned about devices' ability to collect personal data, while 69% of respondents said that they should own their data.

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