FTC Warns of the Risks to Consumers Posed by the “Internet of Things”

In a recent report, the FTC staff recommended a number of best practices that it believes businesses should adopt to protect consumer privacy and security, as Americans continue to capitalize on the rapid growth of connected smart devices. According to the report, the number of connected smart devices is likely to grow from 25 billion today to nearly 50 billion by 2020. While these devices undoubtedly make consumers lives easier, they also pose privacy and security risks associated with the collection of mountains of consumer data. FTC Chairwoman Edith Ramirez cheered the report’s findings:

The only way for the Internet of Things to reach its full potential for innovation is with the trust of American consumers. We believe that by adopting the best practices we’ve laid out, businesses will be better able to provide consumers the protections they want and allow the benefits of the Internet of Things to be fully realized.

However, not everyone has shared Ms. Ramirez’s same zeal about the FTC’s report, including FTC Commissioner, Joshua Wright, who voted against releasing the report and issued his own dissenting statement. Furthermore, other tech companies and some members of Congress have shown their skepticism over the report, and aim to keep the FTC from any overreaching that might inhibit this new and burgeoning tech market. While the FTC’s report stops short of recommending specific legislation as it relates to the Internet of Things, it does signal to connected smart device companies that the FTC is watching them. To date, the FTC has only brought one Internet of Things enforcement case, suing TRENDnet, a maker of Web-enabled home-security cameras. It will be interesting to see how the FTC’s growing interest in policing the vast Internet of Things will impact the connected smart device market, and what pushback may come from Congress regarding the FTC’s reach.