FTC: "Internet of Things" poses consumer risks

For consumers, the advent of "smart" TVs, home automation gear and other web-enabled products offers a wealth of new capabilities. But the "Internet of Things," as this emerging technological ecosystem is known, also poses serious security risks.

In a new report, the Federal Trade Commission lays out just how vulnerable that makes us, urging consumers and businesses to make safe use and design of the gadgets a priority.

Although there is no single, uniform definition of the The Internet of Things, it generally refers to physical objects -- from home thermostat and lighting controls to baby monitors and wearable fitness gadgets -- that can connect to the Internet and each other. Not counting computers and smartphones, such devices are estimated to number 25 billion worldwide, including health monitoring, home security, vehicle, power usage and many other products.

Although such gear has a wide range of potential uses, they also generate and store enormous amounts of potentially sensitive data. The FTC raises questions about who has access to that information and how it is protected.

For instance, what if a prospective employer could see that you were regularly out driving at 3 a.m.? Could that cost you a chance at a job, or push up your auto insurance rates?

"The only way for the Internet of Things to reach its full potential for innovation is with the trust of American consumers," FTC Chairwoman Edith Ramirez said in a statement.

As evidenced by a website that last year posted 73,000 webcam streams, consumers' lack of awareness of basic security can pose a huge problem. The incident largely stemmed from people's failure to change the factory-set usernames and passwords on webcams.

The FTC advises consumers to ask themselves the following questions before buying the latest gadgets:

  • Does it connect to the Internet or other devices?
  • What kind of information will it collect or transmit about me?
  • Who will get that information?
  • How will my personal information be used, stored and protected?

Meanwhile, product manufacturers are being urged to consider potential security issues and to build in protections. The FTC also wants companies to minimize the collection of user data culled from the Internet of Things, which could make for a less attractive target for hackers.

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    Mitch Lipka is an award-winning consumer columnist. He was in charge of consumer news for AOL's personal finance site and was a senior editor at Consumer Reports. He was also a reporter for The Philadelphia Inquirer and the South Florida Sun-Sentinel, among other publications.