FTC Chief: Internet of Things Poses ‘Immense' Privacy Risks

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By Alexei Alexis

Jan. 6 — Federal Trade Commission Chairwoman Edith Ramirez used a speech at the 2015 Consumer Electronics Show in Las Vegas to highlight a set of best practices to address “immense” consumer privacy risks posed by the “Internet of Things.”

Ramirez called for companies in the emerging market to embrace principles such as “security by design” and “data minimization.”

“In the not too distant future, many, if not most, aspects of our everyday lives will be digitally observed and stored,” Ramirez said Jan. 6, according to prepared remarks. “That data trove will contain a wealth of revealing information that, when patched together, will present a deeply personal and startlingly complete picture of each of us—one that includes details about our financial circumstances, our health, our religious preferences, and our family and friends.”

The annual event is organized by the Consumer Electronics Association. This year, the association touted the largest-ever Internet of Things showcase, with more than 900 exhibitors.

The Internet of Things refers to the ability of everyday devices, such as home appliances, to become interconnected. In 2015 alone, the number of connected devices in the world is expected to reach 25 billion, Ramirez noted.

FTC Report Expected

The FTC convened a workshop in 2013 to study privacy concerns related to the industry, and the agency is expected to issue a report with findings and recommendations.

FTC Consumer Protection Director Jessica Rich has indicated that the report will be unveiled early this year.

Besides the ubiquitous collection of personal information, the Internet of Things has the potential to lead to unexpected uses of consumer data that could have adverse consequences, as well as heightened security risks, according to Ramirez.

In light of those concerns, she said that companies should collect only the information needed for a specific purpose and then safely dispose of it afterwards—a concept known as data minimization. She also called for steps to ensure that security features are built into devices from the outset, a so-called privacy by security approach.

“As is evident here this week, companies are investing billions of dollars in this growing industry; they should also make appropriate investments in privacy and security,” Ramirez said.

FTC Commissioner Maureen Ohlhausen, a Republican, has said the federal government should practice “regulatory humility” in evaluating what, if any, laws or regulations may be necessary in light of the growing market.

To contact the reporter on this story: Alexei Alexis in Washington at aalexis@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com