Chairwoman Edith Ramirez of the Federal Trade Commission (FTC) warns that the rise of smart gadgets that are interconnected to one another in a network we call Internet of Things could potentially destroy what little privacy most people already have.
Speaking at the International Consumer Electronics Show (CES) in Las Vegas, Nevada, Ramirez urged businesses making smart devices to regard the privacy of their customers as a top priority, adding that they should only collect data that is absolutely necessary for the device to function fully. Ramirez also said that businesses must provide consumers full control over what data is collected and how this is used afterwards.
The FTC chairwoman cites as an example the use of smart TVs and tablets which track the user's TV viewing preferences. She says the data gathered by these devices could be shared with other organizations, such as universities or employers the user is applying for, and could potentially be used for purposes other than explicitly permitted by the user.
"Your smart TV and tablet may track whether you watch the History Channel or reality television," Ramirez said. "But will your TV-viewing habits be shared with prospective employers or universities?"
"And will this information be used to paint a picture of you that you won't see but that others will - people who might make decisions about whether you are shown ads for organic food or junk food, where your call to customer service is routed, and what offers of credit and other products you receive?"
While the FTC chairwoman acknowledges that the Internet of Things boom has the potential to improve health and generate economic growth, Ramirez says the benefits of technological advancement must not come at the expense of the privacy of users.
"I question the notion that we must put sensitive consumer data at risk on the off-chance a company might someday discover a valuable use for the information," Ramirez says.
Many companies claim to protect their customers' sensitive information, but Ramirez argues that businesses also avoid too much regulation because it hampers innovation or the creation of new, unexpected uses for the collected data.
Still, the FTC has no authority to regulate the growing Internet of Things industry. It can only push Congress to create new consumer privacy regulations and ensure that businesses are not violating their own privacy policies and practicing unfair trade practices.
A report by Ericsson says at least 200 million connected devices were available at the end of 2013, and the number could grow to up to four times within the next five years.
