When Smart Products Turn Dumb

In recent years, the marketplace has witnessed a remarkable surge in the availability and adoption of smart products. These innovative devices, often equipped with internet connectivity and advanced sensors, have seamlessly integrated into our daily lives, offering convenience, efficiency, and enhanced experiences. As of 2023, the number of smart products available in the marketplace has surpassed 15 billion, reflecting the rapid pace of technological advancement and this number is expected to double by 2030. With this rapid growth will come increased product liability risks.

Examples of Smart Products and Associated Issues

While smart products have brought about transformative changes, they haven’t been without their challenges. Here are five examples of smart products that have led to issues for their owners:

Smart Home Security Cameras: Security breaches have occurred with certain smart home security cameras, where unauthorized individuals gained access to live feeds, potentially invading homeowners’ privacy.

Smart Thermostats: Instances of unauthorized control and manipulation of smart thermostats have been reported, causing discomfort for homeowners, and raising concerns about potential misuse.

Connected Vehicles: Vulnerabilities in connected car systems have led to cases of remote hacking, enabling attackers to gain control over vehicle functions, jeopardizing driver safety.

Health and Fitness Trackers: Certain health trackers have faced privacy breaches, exposing users’ personal health data and activity patterns, which can have serious implications for user privacy.

Smart Appliances: Some smart appliances, like refrigerators or washing machines, have been exploited to launch cyberattacks by forming part of botnets, affecting the performance of other connected devices.

Vulnerabilities and Obsolescence in Smart Products

Several common issues contribute to the vulnerability and potential obsolescence of smart products:

Inadequate Security Measures: Insufficient security protocols during the design and manufacturing phases can lead to vulnerabilities that hackers exploit.

Lack of Regular Updates: Failure to provide timely software updates and security patches leaves devices exposed to known vulnerabilities.

Weak Authentication: Poor authentication mechanisms can lead to unauthorized access, potentially compromising user data and control over devices.

Privacy Concerns: The collection and storage of personal data by smart devices raise privacy issues if not handled securely and transparently.

Interoperability Challenges: Devices from different manufacturers may not communicate seamlessly, potentially leaving security gaps when integrating them into a smart ecosystem.

Governmental Oversight and Regulations

In the United States, governmental oversight and regulations for smart products are gradually evolving to address the emerging challenges:

Federal Trade Commission (FTC): The FTC plays a key role in regulating privacy and security aspects of consumer technologies, including smart products. It enforces data protection and consumer rights in cases of security breaches.

National Institute of Standards and Technology (NIST): NIST provides guidelines and best practices for ensuring the cybersecurity of connected devices, helping manufacturers implement stronger security measures.

Cybersecurity Improvement Act: Enacted in 2014, this legislation aims to enhance the security of Internet of Things (IoT) devices used by federal agencies, setting an example for the private sector.

Proposed IoT Cybersecurity Improvement Act 2.0: Building on its predecessor, this act expands the scope of regulations to include a wider range of connected devices and focuses on strengthening cybersecurity requirements.

The proliferation of smart products offers undeniable benefits, yet challenges related to security, privacy, and regulation cannot be overlooked. Manufacturers, regulatory bodies, and consumers must collaborate to ensure the responsible development and use of these technologies, ultimately creating a safer and more secure smart product landscape. However, due to the ever-increasing speed of technology and the slow methodical movement of government action, it appears one of the best deterrents for manufactures and suppliers of smart products will be the potential costs of Product Liability lawsuits.

Product Liability is based on strict liability – manufacturing, design and instruction/warning defect. This means the injured party or plaintiff must only prove that the product involved was the approximate cause of the bodily injury or property damage to win the lawsuit. Just think of the endless possibilities – home security, traffic lights, air traffic control, and pacemakers are just a few examples.

Therefore, it appears insurance companies will have the immediate burden of determining which smart products represent good risks and likely want to make sure the new products coming into the U.S. market have a minimum level of security to be insurable.

Get Product Liability Quote for your Smart Products

At Sadler Insurance we are licensed in all 50 states and work with and have large books of business with all the top product liability insurance companies. If you need assistance, please give me, Paul Owens, a call at 800-622-7370 or go to Request A Quote to provide some information about your company and products so we can email you the appropriate application and the information we will need to provide you with quotes.