Waking up for the workday, you walk into the kitchen to see a fresh cup of coffee that has been programmed to brew based on your phone’s alarm clock. Your MP3 player automatically starts playing some smooth jazz, after having learned that when you wake up this early, you typically play that type of music. Your refrigerator adds “need milk” to the shopping list on your phone, and has also noticed that your nighttime water consumption has increased. Sitting in your self-driving car, which is already pre-programmed to get you to work as it has synced with your calendar, you realize you forgot to lock the doors. Don’t worry – smart locks have locked the doors for you after receiving a signal from your thermostat that there has been no movement in the home for two hours.
While this may seem like a scene from “The Jetsons,” this is actually a snapshot of already existing technology that is part of the Internet of Things, or IoT, a network of objects containing a series of sensors, software and other electronics that allow it to collect, process and share data with businesses, consumers or other devices. This collecting of huge amounts of data presents an enormous opportunity for retailers and a source of alarm for privacy advocates. For example, if your refrigerator senses an increase in water consumption and your scale simultaneously senses a decrease in weight, could these devices ever “talk” to each other and signal to you that you might want to see a doctor for a checkup? Who knows? But, one thing is for sure: insurance companies, marketers and consumers themselves likely would pay huge sums of money to identify who is – or may soon be – suffering from various health issues.
Despite serious concerns over privacy, data storage and data uses, the smart-technology industry and the Internet of Things continue to grow exponentially. For example, John Deere has embedded technology in some of its farming equipment to enhance the accuracy of plowing land and to fine-tune the pressure used to plant seed depending on the hardness of the soil. This is a great example of how a forward-thinking company took an arguably “old” technology and paired it with the Internet of Things to modernize (and monetize) it in a meaningful way.
What does this all mean for business? First, businesses should reassess their privacy practices, especially if they use or sell IoT devices that collect and store customer data. State and federal laws are constantly changing and enhancing the privacy protections over consumer data. And, you might not be aware that last year, Rhode Island’s new Identity Theft Protection Act of 2015 went into effect. Has your business adopted the necessary policies and programs to comply with this law?
Second, businesses should have a cybersecurity consultant assess the integrity and security of information systems to ensure it is adequately protected from cyberattacks and hackers. Finally, businesses should take a hard look at their existing insurance coverages to see if they need to purchase cyber-related or data-breach coverages.
Businesses do not have the luxury of ignoring the Internet of Things and its risks and opportunities. As consumers continue to demand and expect connectivity between various aspects of their lives and devices, any business that ignores these opportunities will be left behind. Paradoxically, however, those same consumers (and lawmakers) are increasingly demanding stronger protections over how businesses store and use data obtained through such devices. Therefore, businesses should constantly be weighing and considering the benefits of embracing smart technologies versus the risks associated with collecting, using and storing customer data.
Brian J. Lamoureux is a partner at Pannone Lopes Devereaux & O’Gara LLC in Johnston.