Legal Issues to Consider as IoT Becomes Way of Life

Recently I got a new car. I love its many features, including, among other things, on-board GPS.  But my car, like zillions of things around me, is now generating data about where I drive, how fast I go, how much gas I burn (etc.) There is much information to be culled from my car’s embedded sophisticated technology (who knew, for example, that by going from 89 to 93 octane, the mileage would improve by a whopping 6 miles per gallon?).  But the flip side is that my car is generating a great deal of information about me that may be used by the manufacturer or anyone else to whom it sells data about me and thousands—if not hundreds of thousands—of car owners like me. With this in mind, I thought it might be time for a review and recap of IoT legal considerations geared towards those entities that are purchasing increasingly sophisticated products for work and home use.

While the data that my car generates is of little interest to anyone but me, the data generated by cars like mine, in the aggregate, is very important to an increasing number of entities that want to sell me things. It’s the big data—the information assembled from the consumers who fit into whatever demographic interests a marketer that has value, and often, that targeted data is based on Artificial Intelligence obtained from the aggregated information that underlies the very concept of machine learning.  In fact, successful machine “learning” is only possible because of the crunching of huge datasets.  Obviously this information can only be “crunched” once it’s been collected.  Whether it’s been collected legally—or from individuals who have knowingly provided consent is an entirely different issue.

The widespread deployment of IoT devices has created some obvious and less obvious concerns for the entities that are purchasing these devices. The U.S. Federal Trade Commission has issued a staff report that is clear and compelling which addresses the overall privacy and security issues posed, and it’s certainly worth a read.  I also attended an event in Washington earlier in the year where one of the key points made was simply that companies that do not “bake in” security and privacy concerns at the most basic levels of device creation and innovation expose their customers to more risk than is necessary. That is, if you’re in the car business and start embedding IoT capabilities into your vehicles, there’s a reasonably good chance that you may not have the experience or sophistication to protect consumer data in a sufficient manner.

A recent white paper from the British law form Kemp IT Law highlighted 6 key areas for consideration when acquiring, deploying and using devices with IoT capabilities. The first three are the most critical, but all six warrant careful consideration.

First, the owner/operator of the IoT device often essentially surrenders control of its own information, whether that’s personal or business.  At the FTC event last fall, experts indicated that, in fact, most consumers don’t even both changing default passwords, thus making whatever data they generate incredibly vulnerable.  While enterprise users tend to be more sophisticated, they too often don’t handle the most mundane data security tasks in favor of the more complex ones.

Secondly, if in fact the user, residential or enterprise, takes the time to provide consent to the data collector, there remains a legitimate question about the quality of that consent.  Is it like the click-through agreements that show up on iPhones, and who reads that anyway?  It may not be best to read these things before bed (and it’s not like you have much opportunity to negotiate the terms anyway), but a click-through without reading can create a significant vulnerability about which, most dangerously, the end user isn’t even aware.

Third, one of the other black holes of this whole area is how the data that’s generated may be “repurposed.”  In this scenario, even if knowledgeable consent is given to the primary requestor, it is not likely that that the person granting consent has granted such consent for use of the data by third parties for reasons beyond those originally explained.

The fourth issue has to do with the aggregation of data.  The collection of data from different sources about an individual can shed more light on that person’s personal habits and information than the individual or entity would care to have shared.  Again, there’s not a great deal that can be done about it other than having the knowledge that it’s a potential problem.

Fifth, as individual or enterprise data becomes more voluminous, the ability to remain anonymous becomes increasingly difficult to sustain.  While this may not be a problem, in fact, there are many entities and individuals who when thinking that he/she/they are being anonymous would be, politely if not belligerently, dismayed to discover otherwise.

Sixth, the security risks posed by increased access to individual and enterprise information cannot be overstated.  What’s unusual about this point in this context is that issues like battery life and other vulnerabilities that could compromise otherwise confidential data must be considered, either before new IoT equipment is purchased, or its use is continued.  If an enterprise doesn’t understand where it’s vulnerabilities lie, it can find itself in a world of hurt when an event that was inconvenient before IoT becomes the headline in the nightly news, whatever network you watch!

One final note on this. While most devices that rely on radio frequency are registered with the FCC, it’s important to consider issues associated with RF emissions. This applies not just to interference caused by IoT devices, but vulnerabilities as well.  Whether that interference is intentional, unintentional or merely incidental, interference can create a whole other magnum of problems for the user who is neither familiar with the possibility or prepared to manage a problem when it occurs.