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Right Out of the Box: California Enacts First-of-its-Kind Statute Regulating Internet-of-Things
The California legislature had a big year in 2018. While a great deal of attention has focused on the California Consumer Privacy Act of 2018 (CCPA), a sweeping new privacy law often compared to Europe's General Data Protection Regulation (GDPR), California also passed a less-publicized, but highly critical, statute that will regulate certain aspects of Internet of Things (IoT or connected) device security.
The IoT law, known as SB-327, should have a significant impact that extends well beyond California's borders when it goes into effect in January 2020. Companies impacted by SB-327 — especially manufacturers and distributors of IoT devices — should work to ensure compliance with the act as soon as possible if regulatory fallout is to be avoided come January 2020.
What Does the IoT Statute Cover?
As “smart” devices, like Internet-connected refrigerators, coffee makers and even industrial control systems for the nation's critical infrastructure become more prevalent, the opportunity for device hacking and improper use becomes more widespread and potentially more devastating. For example, the Mirai botnet, which took down a large swath of the Internet in 2016, gained control of poorly protected IoT devices and used them to carry out one of the largest distributed denial of service (DDoS) attacks on record.
On a more personal level, the proliferation of integrated cameras and sensors, often with easily hackable manufacturer default passwords, provides hackers with a ready means to peer into, if not break into, homes. With SB-327, California seeks to address these and related security concerns head-on.
What Requirements Does the IoT Statute Impose?
The primary way in which SB-327 will attempt to address IoT security risks is by directly imposing security requirements on the device manufacturers themselves. In contrast, regulations like the GDPR, New York's Department of Financial Services Cybersecurity Regulation (and even, implicitly, the CCPA), only call for third-party security reviews. Specifically, SB-327 will require companies offering IoT devices for sale in California to equip their products with “reasonable security features.” The obvious question then becomes, what does “reasonable” actually mean?
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