Safeguarding the Connected Home: Addressing Cybersecurity Risks and Promoting Consumer Awareness

As connected devices continues to expand reach into every aspect of our lives, it is vital to address the cybersecurity risks associated with these technologies. Parks Associates applauds the new White House initiative, the US Cyber Trust Mark program, announced by the Federal Trade Commission today. The new program includes a standard of security presented in connected devices and then leveled with the Cyber Trust Mark logo.

Privacy and security are two key areas Parks Associates has covered extensively in its research work. We just released a highly relevant white paper on the topic. Below is an excerpt.

Lack of Awareness on Securing Data

Consumers’ homes are growing evermore complicated as an increasing number of internet-connected products are purchased and used regularly. However, consumers are oftentimes unaware of how to properly manage and secure these products to prevent possible data and privacy loss. Certain products are not designed to promote end users’ security and privacy and require special handling on the part of consumers to ensure data is protected.

With identity theft, fraud, and invasive data collection growing, smart home platforms and their customers are increasingly at risk. Parks Associates’ research has found that some 72% of smart home product owners are concerned with the security of the personal data that is collected and transmitted by their smart home products. Public events such as hacking incidents, data breaches, and overly broad data collection by technology companies further heighten consumer concerns.

Smart home device owners and those who are most likely to adopt these products report much higher rates of data privacy and security incidents than other consumers. This segment is concerned about hackers and others with bad intentions, but also concerned about technology companies and criminals. Consumer trust is acting as a key differentiator for players in the connected home space, helping them to attract increasingly savvy consumers.

This recent white paper by Parks Associates highlights the data privacy and security risks posed by the connected home, how consumers perceive these risks, and the role smart home platforms play in mitigating threats. It explores the risks to consumers’ identity and data and the opportunity for players in this space – including platforms, internet service providers, home security providers, hardware companies, and home subscription service providers – to help educate and protect their customers against potential harm.

The Connected Home and Data Privacy?and Security

Today’s consumer reports owning and using a wide mix of product types, including not just traditional computing products with web browsers and apps, but also many varieties of headless IoT devices that interact with the internet in automatic and oftentimes invisible ways (or so it seems to the consumer). These devices typically rely on other devices or systems in the network to receive and process data.

Headless IoT devices are Internet of Things (IoT) products that do not have a user interface or display screen. Unlike more typical devices, such as smartphones or laptops, which have a graphical user interface (GUI) that allows users to interact with them, headless IoT devices are designed to operate autonomously and communicate with other devices or systems in the network.

These products range from browserless consumer electronic devices, such as internet-enabled printers, smart speakers, and robotic vacuum cleaners, to new smart home products, including smart thermostats, video doorbells, and even appliances. Each internet-connected device and accompanying service has its own unique privacy policies, data collection practices, and underlying vulnerabilities.

As the landscape of consumer-connected products grows more complex, the attack surface of the connected household grows, and the likelihood of an adverse event rises. While many consumers are aware that internet-connected products and services have potential risks, they lack a deep understanding of these risks and are unsure of how to mitigate them.

Parks Associates research shows 41% of internet households in the US have a smart home device and the "Early Majority" segment now represents 33% of all smart home adopter households. Our research shows the profile of the smart home adopter looks different than a few years ago. The Super User (10+ devices) who buys technology immediately and tends to own five or more smart home devices is no longer the center of the story. A shift toward mass market may finally be under way.

In addition, some 74% of heads of US internet households report being ‘concerned’ about the security of their personal data, rating their concern a 5-7 on a 7pt scale. These concerns are largely founded: nearly half of consumers reported experiencing at least one tested privacy or security issue in the past year.

Tested data privacy and security issues:

1.???????Identity theft

2.???????Data theft over home networks

3.???????Data theft over public Wi-Fi

4.???????Infection by viruses or spyware

5.???????Private information being made public

6.???????Companies selling personal data

7.???????Companies tracking online activities

8.???????Hackers gaining access

9.???????Unwanted recordings of video or audio data by devices

10.????Device theft

11.????Loss of a device with personal data.

Consumer Perspectives on Data Privacy and Security

While consumers overall are concerned about the security and privacy of their personal data, smart home product owners in particular report concerns over the data security of their internet-connected products. These worries include viruses or spyware, unauthorized access into products by third parties or even product or platform providers, and the security of the personal data that is collected and transmitted by their devices.

Consumer concern over the personal data collected and transmitted by internet-connected products is highly correlated with overall concern about personal data security. Concern is higher among those who own more products, and greater still among savvy adopters who are on the cutting edge of technology. Notably, owners of video security devices report lower levels of concern than owners of other product types; however, they also tend to own fewer devices overall, reflecting that they may be newer to smart home adoption.

Awareness of data and privacy threats and concern over data privacy and security are generally higher among young consumers with strong tech affinities. Consumers who have knowingly experienced data privacy and security problems are more likely to be concerned – and the level of concern is correlated with the number of problems they have experienced. Among smart home households, the number of products owned and used is directly correlated with the number of problems they report.

Parks Associates research shows 30M households in the US now have at least one video doorbell or networked camera.

Trust is the Cornerstone in a Relationship

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, written in partnership with Iris? Powered by Generali .