FTC Leaves Internet of Things Enforcement Door Open

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A few weeks ago, I posted a blog about how the European Union is taking a closer look at how big companies such as Google and Facebook are collecting customer data and whether these practices violate antitrust rules. The EU's Commissioner for Competition, Margrethe Vestager, has expressed concerns that if just a handful of companies control customer data, they could have the power to drive rivals out of the market. More recently, a commissioner of the Federal Trade Commission, Terrell McSweeny, weighed in on the consumer privacy and security implications regarding the Internet of Things (IoT). While the FTC doesn't plan to impose sweeping IoT regulations, McSweeny said that a "comprehensive data security framework that's not overly prescriptive" could be a workable approach to protecting consumers and gaining their trust with IoT-enabled products.

A few weeks ago, I posted a blog about how the European Union is taking a closer look at how big companies such as Google and Facebook are collecting customer data and whether these practices violate antitrust rules. The EU's Commissioner for Competition, Margrethe Vestager, has expressed concerns that if just a handful of companies control customer data, they could have the power to drive rivals out of the market. More recently, a commissioner of the Federal Trade Commission, Terrell McSweeny, weighed in on the consumer privacy and security implications regarding the Internet of Things (IoT). While the FTC doesn't plan to impose sweeping IoT regulations, McSweeny said that a "comprehensive data security framework that's not overly prescriptive" could be a workable approach to protecting consumers and gaining their trust with IoT-enabled products.At a Feb. 8 event sponsored by the U.S. Chamber of Commerce, McSweeny said that "the most important piece of consumer trust is making sure the data they're sharing - their private information - is held securely and the devices themselves are secure."

While many consumers don't really know what the Internet of Things is, they are concerned about how companies are collecting and using their data. According to a 2015 study by Altimeter Group, roughly half of consumers say they're "highly uncomfortable" with companies using and selling their data in physical spaces.

McSweeny also pointed out that the FTC "is generally an enforcement agency, not a regulator," meaning that the agency historically hasn't crafted prescriptive regulations for any particular industry or industries. But it has taken IoT enforcement action against TRENDnet, a provider of SMB and consumer networking devices, regarding an Internet camera the company marketed to parents and medical professionals for secure, remote monitoring of infants and other dependents. In 2012, hackers breached TRENDnet's website and posted videos from hundreds of users' feeds. The FTC charged that TRENDnet provided inadequate data security despite advertising that its product was secure. TRENDnet ended up settling with the FTC in January 2014.

There are numerous ways that companies can take advantage of IoT capabilities to forge deeper connections with customers, from a smart refrigerator that can notify a customer about contents that need to be replaced to health patches or biosensors that provide healthcare professionals vital information on their patients. But as organizational leaders explore opportunities for using the Internet of Things, protecting customer data needs to remain a top priority.

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