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For most of human history, the balance of power in commercial transactions has been heavily weighted in favour of the seller. As the Romans would say, caveat emptor – buyer beware!
However, there is just as long a history of people using their collective power to protect consumers from unscrupulous sellers, whose profits are too often based on externalising their costs which are then borne by the society. Probably the earliest known consumer safety law is found in Hammurabi’s Code nearly 4000 years ago – it is quite a harsh example:
If a builder builds a house for someone, and does not construct it properly, and the house which he built falls in and kills its owner, then that builder shall be put to death.
However, consumer safety laws as we know them today are a relatively new invention. The Consumer Product Safety Act became law in the USA in 1972. The Consumer Protection Act became law in the UK in 1987.
Today’s laws provide for stiff penalties – for example the UK’s CPA makes product safety issues into criminal offenses liable with up to 6 months in prison and unlimited fines. These laws also mandate enforcement agencies to set standards, buy and test products, and to sue sellers and manufacturers.
So if you sell a household device that causes physical harm to someone, you run some serious risks to your business and to your personal freedom. The same is not true if you sell a household device that causes very real financial, psychological, and physical harm to someone by putting their digital security at risk. The same is not true if you sell a household device that causes very real psychological harm, civil rights harm, and sometimes physical harm to someone by putting their privacy rights at risk. In those cases, your worst case risk is currently a slap on the wrist.
This situation may well change at the end of May 2017 when the EU General Data Protection Regulation (GDPR) goes into force across the EU, and for all companies with any presence or doing business in the EU. The GDPR provides two very welcome threats that can be wielded against would-be negligent vendors: the possibility of real fines – up to 2% of worldwide turnover; and a presumption of guilt if there is a breach – it will be up to the vendor to show that they were not negligent.
However, the GDPR does not specifically regulate digital consumer goods – in other words Internet of Things (IoT) “smart” devices. Your average IoT device is a disaster in terms of both security and privacy – as our Mikko Hypponen‘s eponymous Law states: “smart device” = “vulnerable device”, or if you prefer the Fennel Corollary: “smart device” = “vulnerable surveillance device”.
The current IoT market is like the household goods market before consumer safety laws were introduced. This is why I am very happy to see initiatives like the UK government’s proposed Secure by Design: Improving the cyber security of consumer Internet of Things Report. While the report has many issues, there is clearly a need for the addition of serious consumer protection laws in the security and privacy area.
So if the UK proposal does not go far enough, what would I propose as common sense IoT security and privacy regulation? Here are 5 things I think are mandatory for any serious regulation in this area:
Just as there will always be ways for a determined person to hack around any physical or software security controls, people will find ways around any regulations. However, it is still better to attempt to protect vulnerable consumers than to pretend the problem doesn’t exist; or even worse, to blame the users who have no real choice and no possibility to have any kind of informed consent for the very real security and privacy risks they face.
Let’s start somewhere!
A major law enforcement organization is warning about the growing dangers of the Internet of…
August 10, 2018