The Internet of Things: EU vs US guidance

by DLA Piper
Contact

In its February 2015 Report on the Internet of Things (IoT), the FTC estimated that there are now 25 billion connected devices worldwide. Another more conservative report by Gartner estimates there will be 2.9 billion connected devices in the consumer sector this year and 5 billion total, and that total will climb to 25 billion by 2020.

Regardless of the accuracy of the numbers, clearly the growth of IoT presents unique challenges because of the sheer variety of “connected devices” – from sprinklers, to fitness trackers, to connected cars – and the data they may collect. It is therefore not surprising that regulators have released privacy and security guidance and frameworks for IoT.

 

In September 2014, the European Commission’s Article 29 Working Party on Data Protection (WP 29 Report) released an Opinion,1 setting forth its interpretation of how EU data protection laws apply to IoT. Six months later, the FTC released a report2 setting forth privacy and security best practices for IoT. This article looks at some of the key issues addressed in each report and highlights key differences.

WP 29 REPT OVERVIEW

 

The WP 29 Report looks at IoT via EU data protection principles, highlighting these concerns for IoT manufacturers, developers and data collectors:

 

Lack of control – Interconnectivity means a greater potential for automatic flow of data among devices (and vendors) without notice to users.

Additional purposes – Interconnectivity also may lead to use of gathered data by third parties for other than the original intent.

Consent – Because users lack full disclosure of data flow, their consent to initial data collection may be inadequate.

Profiling – Fine-grained user monitoring and profiling could result from the type of information collectable from connected devices.

Limiting anonymity – More use of connected devices suggests lower likelihood for maintaining anonymity.

Security – Large volumes of data transferring over connected devices may lead to considerable security risks.

 

WP 29 REPORT RECOMMENDATIONS

 

To address some of these concerns, the WP 29 Report recommends that IoT manufacturers, developers and data collectors:

  • Conduct a privacy impact assessment before releasing a device.
  • Delete raw data from the device as soon as it has been extracted.
  • Follow privacy-by-design and privacy-by-default principles.
  • In a user-friendly way, provide a privacy notice, and obtain consent or offer the right to refuse.
  • Design devices to inform both users and people interacting with them (e.g., people being recorded by a camera in a wearable technology) of the data processing by the entity providing the device.
  • Inform users of data that has been collected and enable them to access, review and edit that data before it is transferred.
  • Give users granular choices on the type of processing as well as time and frequency of data gathering. 

These principles apply whenever a connected device is used in the EU, even if the device did not originate in the EU. While the WP 29 Report is not binding law, it is persuasive to EU regulators, when deciding how to apply data protection law to the IoT. Once the new EU Data Protection Regulation takes effect, fines for violations of EU data protection law could be up to 5 percent of global turnover for a company. Thus, flouting the WP 29 Report principles, which are considered persuasive authority on the interpretation of EU data protection law, could result in very significant fines. 

FTC REPORT OVERVIEW

The FTC Report focuses on “security” and “privacy” risks raised by participants in its IoT workshop: 

Security: Harm to consumers from unauthorized access and misuse of personal information, attacks on other systems and safety risks: 

  • Remote access to smart meters could enable thieves to determine when a house is empty, leaving it susceptible to robbery.
  • A connected device could be used to gain control of a consumer’s internal network and in turn, attack a third-party system.
  • Remote access to stored financial data could enable fraud.

Privacy: The FTC Report also highlighted privacy-related concerns over the collection of sensitive information (geolocation, financial and health data), the sheer volume of data collected and the potential for misuse. 

FTC BEST PRACTICES

 

Like the WP 29 Report, the FTC Report recommends best practices to IoT manufacturers, developers and data collectors, focusing on: 

Data security – The FTC recommends that device manufacturers adopt a privacy-by-design approach, including a privacy and security risk assessment made prior to release, use of “smart defaults” (e.g., forcing changes to default device passwords) and security and access control measures, and monitoring throughout the device’s life cycle. 

Data minimization – While endorsing the necessity to limit collection and retention of users’ data, the FTC calls for a “flexible approach,” urging companies to “develop policies and practices that impose reasonable limits on the collection and retention of consumer data.” 

Notice and choice – The FTC recognizes notice and choice play a “pivotal role,” but – in contrast to the WP 29 view – acknowledges that notice and choice are not always necessary. Instead, the FTC calls for notice and choice where sensitive data is collected or where there is unexpected collection or sharing. 

THE COMING DEBATE

 

While there are some similarities in these recommendations, overall the WP 29 takes a more conservative approach and the FTC Report uses a more flexible approach. As the IoT environment evolves, the main debate will focus on how to adapt privacy and security laws to protect individuals without hindering IoT’s growth, while fostering the huge potential of this market.

1 Opinion 8/2014 on the on Recent Developments on the Internet of Things, available here.

2 See this page.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© DLA Piper | Attorney Advertising

Written by:

DLA Piper
Contact
more
less

DLA Piper on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.