FTC Announces First "Internet of Things" Settlement

FTC Privacy/Cyber Risk & Data Security

On September 4, the FTC announced its first action against a marketer of an everyday product with interconnectivity to the Internet and other mobile devices – what the FTC refers to as the “Internet of Things.” The company, which markets video cameras designed to allow consumers to monitor their homes remotely, agreed to settle the FTC’s allegation that its security practices exposed the private lives of hundreds of consumers to public viewing on the Internet. The FTC claimed that the company marketed its products as “secure” when, according to the FTC, they had faulty software that potentially allowed for online viewing and listening. The company resolved the complaint without paying a penalty, but agreed to establish a comprehensive information security program designed to address security risks that could result in unauthorized access to or use of the company’s devices, and to protect the security, confidentiality, and integrity of information that is stored, captured, accessed, or transmitted by its devices. The agreement also requires the company to obtain third-party assessments of its security programs every two years for the next 20 years, and prohibits the company from (i) misrepresenting the security of its cameras or the security, privacy, confidentiality, or integrity of the information that its cameras or other devices transmit and (ii) misrepresenting the extent to which a consumer can control the security of information the cameras or other devices store, capture, access, or transmit. The FTC is planning an “Internet of Things” workshop for later this year.