“This is not a camera, it’s a computer. But they’re not designing it as a computer, they’re designing it as a camera.” –Artem Harutyunyan

One of the biggest takeaways from last year’s Federal Trade Commission roundtable on the Internet of Things was the inherent security issues and vulnerabilities created by ubiquitous computing. Sure, there’s a big market out there for connected devices and smart tools, but if you’re not designing privacy and security into a product from the drawing board, you could miss out on all that market opportunity and find yourself facing litigation.

It’s clear that many startups and small- to medium-sized businesses are rushing in for a slice of the IoT pie. That’s great – unless you’re cutting security corners.

This was perhaps best demonstrated in a report from Forbes columnist and self-described privacy pragmatist Kashmir Hill on Chinese-based webcam manufacturer Foscam. In a nutshell, two friends—Sergy Shekyan and Artem Harutyunyan—who both happen to be software engineers, purchased what was, at the time, the hottest baby monitor on the market. They could even connect a feed to their iPhone to see what was happening in their baby’s room. Oh, and the monitor only cost $40.

Great deal, right?

Well, it quickly became apparent what was sacrificed to create such a great offer. This culminated in some oddball who hacked into the device while yelling, “Wake up, you little slut,” to one unsuspecting baby.

Really, the incident is a great example of what can happen when businesses don’t think about privacy and security before going to market. Here are a few lessons I gleaned from Kashmir’s report.

•  Make your users change the password upon first use. It turns out that the default password for all the baby monitors was “admin,” but at no point did the company require the user to change the password, thus rendering virtually all the devices vulnerable. “We wanted to give our customers the freedom to keep it easy and not have to make their own password,” said Foscam’s chief operating officer. “But it wound up being costly to us and our brand. So now we’re going to force them to customize their passwords.”
•  Keep an eye on the infosec forums and watch the hacking blogosphere. Though it’s impossible to read everything on the Internet, it’s wise to see what security experts are saying about your product. In fact, that’s how Shekyan and Harutyunyan found out about the “admin” password default. They even then presented their Foscam research at the “Hack In the Box” security conference in Amsterdam. Foscam was clueless.
•  Keep an ear open to consumer complaints and concerns and have a way to communicate any patches and security updates. With all their research and White Hat hacking of Foscam, Shekyan and Harutyunyan had no way to communicate their concerns with the company. Plus, many who purchased Foscam’s device did so off Amazon and then connected it to a third-party app (there were several that users could choose from). So even if Foscam had a patch for the security issues, it didn’t have a marketing and communications arm to comprehensively disclose and convey the message. And, from the point of purchase, it’s important to ensure customers know that regular privacy and security updates are normal but necessary.Amazingly, Foscam’s COO told Hill that he still doesn’t have a good answer for who people should contact at Foscam if they find a problem. Yikes!
•  Require a rigorous testing environment for your product before going to market. This is perhaps the essential lesson to learn here. It’s easy to create a cool product or service and quickly go to market to beat your competition, but, often, the consequences will outweigh the early profits. Foscam’s COO said, “We thought we had a rigorous testing environment for new products, but we’re going to add some new steps … We’ve increased the size of the team and have a game plan going forward to do more investigating and catch problems before they happen.” As Forbes’ Hill points out, there are bug bounty startups dedicated to helping businesses find security vulnerabilities in their products, including BugCrowd and Synack.
•  Assume someone wants to hack your service or device. Hard to believe, but Foscam’s COO had trouble understanding why someone would want to hack a baby monitor, saying, “It’s still a surprise to us that someone would want to do that. I don’t know what motive they have. It doesn’t compute with me.” Human nature and psychology aside, the essential point here is that everything is free game for hacking. There’s even an Xbox video game dedicated to controlling a virtual Chicago via hacking.

Harutyunyan sums up the issue succinctly:

It boils down to money … The reason why [Internet of Things] vendors are not doing security better is that it’s cheaper not to do it. It’s expensive to build security in. The shopper in Best Buy will buy the camera for $40 not the one that’s $100. She doesn’t know or care about the security. There will be more and more hacks, not just of cameras but of lots of things. Eventually it will make people care, and it will be more expensive to be insecure than secure.

It’s important to remember Foscam’s case. It creeped people out. According to its COO, the hacks hurt Foscam’s bottomline. He said last year’s sales were down and the family of the Texas toddler whose device was hacked is planning to sue for deceptive trade practices. And, as has been seen in the Wyndham and TrendNET cases, the FTC is watching and ready to bring down the hammer.