Identity Theft in Focus: Understanding the Consequences and Urgency of Data Privacy Protection

Addressing the issue of data privacy and security in the connected home offers many benefits to consumers, product makers, and those serving these markets. For consumers, it prevents potential harm and eases concerns, allowing them to adopt valuable technologies more readily without needing to consider trade-offs. For product makers, it reduces potential liability issues and helps to increase customer confidence and product sales.

There is a true need to educate customers on risks, prevalent scams, and current threats. Many consumers report interest in comprehensive data security services, ranging from traditional antivirus solutions to whole-home protection. Adoption of these services is growing, with new and innovative services increasingly emerging onto the market.

The top services adopted by consumers include traditional antivirus and antimalware applications designed for computers or mobile devices, privacy protection solutions, and identity theft solutions.

One growing area is also that of whole-home cybersecurity, where a solution is embedded in a router or gateway and protects all devices connected to the home network.

Adoption of data security and privacy solutions is greatest among core smart home customer bases, as well as among those who have experienced issues such as identity theft in the past. This includes not just current smart home device owners, but technologists, high-income households, professional security monitoring subscribers, and others. In particular, those who have experienced identity theft in the past adopt data security solutions at a higher rate than other consumers.

Those who have experienced identity theft have faced direct negative consequences from the loss of their personal data, potentially including financial harm and time spent correcting the issue with credit bureaus, debt collectors, and others.

According to Parks Associates, 9% of US internet households report experiencing identity theft in the past 12 months, equating to ~10.5 million households.

The scope of the problem is large, and the risk is rapidly growing. The Identity Theft Resource Center, a non-profit founded to minimize risk and mitigate the impact of identity compromise, reports that in 2022 there were over 1,800 data compromises with an estimated 422M victims2. Breaches have occurred in every industry that collects data, including healthcare, education, and government. With breaches so widespread, identity theft may happen to anyone, making identity theft services highly valuable. These services are particularly valuable to those who have been directly impacted by identity theft or are at a high risk of it.

Market Implications

Consumer trust acts as a differentiator for players in the connected home space. In many ways, data privacy and security in a connected home are nebulous, with privacy policies that are either nonexistent or difficult to understand. IoT product makers focused on selling the most feature-complete products for the lowest cost oftentimes sacrifice data privacy and security, creating additional holes and challenges that consumers and service providers must navigate.

Publicized violations of privacy policies and settings undermine consumer confidence in smart home products and services. Companies must be prepared to earn and keep consumer trust, or be prepared to lose prospective customers to rivals. At present, even basic cybersecurity and data privacy measures offer many benefits and improvements for end users. Companies additionally benefit from offering data privacy and security services to their customers, lowering the risk of events, such as data breaches and identity theft, while also raising consumer confidence.

As consumer awareness of smart homes and its risk on data privacy and security grows, so will hesitance to adopt risky products and services. For smart home products and platforms to break through to majority adoption, the issue of data privacy and security in the connected home must be resolved. By educating consumers, implementing security and privacy measures and controls in product and platform design, and delivering new privacy and security solutions, players across this space can help ensure this future.

This is an excerpt from the research white paper, Data Privacy and Security in the Connected Home, developed in partnership with Iris Powered by Generali. For more information on partnering with Parks Associates, contact Ashton Gambrell