FTC and D-Link

This is a guest post by Peter Kirwan, technology journalist. If you would like to contribute a post, please contact [email protected]

Anyone who doubts that governments are closing in on hardware vendors in a bid to shut down IoT security vulnerabilities needs to catch up with the Federal Trade Commission’s recent lawsuit against D-Link.

The FTC’s 14-page legal complaint accuses the Taiwan-based company of putting consumers at risk by inadequately securing routers and IP cameras.

In this respect, this FTC lawsuit looks much the same as previous ones that held tech vendors to account for security practices that failed to live up to marketing rhetoric.

The difference this time around is that the FTC’s lawsuit includes a pointed reference to reports that D-Link’s devices were compromised by the same kind of IoT botnets that took down US-based Dyn and European service providers in late 2016.

In one way, this isn’t so surprising. In the wake of these recent attacks, the question of how we secure vast numbers of connected devices has rapidly moved up the agenda. (You can read our white paper on this, here.) In December 2016, for example, after analysing the sources of the Dyn attack, Allison Nixon, director of research at the security firm Flashpoint, pointed to the need for new approaches:

“We must look at this problem with fresh eyes and a sober mind, and ask ourselves what the Internet is going to look like when the professionals muscle out the amateurs and take control of extremely large attack power that already threatens our largest networks.”

In recent years, the way in which the FTC interprets its responsibility to protect US consumers from deceptive practices has evolved. It has already established itself as a guardian of digital privacy. Now, it seems, the FTC may be interested in preventing the disruption that accompanies large-scale DDoS attacks.

D-Link, which describes its security policies as “robust”, has pledged to fight the FTC’s case in court. The company argues that the FTC needs to prove that “actual consumers suffered or are likely to suffer actual substantial injuries”. To fight its cornet, D-Link has hired a public interest law firm which accuses the FTC of “unchecked regulatory overreach”.

By contrast, the FTC believes it simply needs to demonstrate that D-Link has misled customers by claiming that its products are secure, while failing to take “reasonable steps” to secure its devices. The FTC claims that this is “unfair or deceptive” under US law.

But who defines what is “reasonable steps” when it comes to the security of connected devices?

The FTC’s lawsuit argues that D-Link failed to protect against flaws which the Open Web Application Security Project (OWASP) “has ranked among the most critical and widespread application vulnerabilities since at least 2007”.

The FTC might just as easily have pointed to its own guidelines, published over two years ago. In the words of Stephen Cobb, senior security researcher at the security firm ESET: “Companies failing to heed the agency’s IoT guidance. . . should not be surprised if they come under scrutiny. Bear in mind that any consumer or consumer advocacy group can request an FTC investigation.”

The FTC has already established that consumers have a right to expect that vendors will take reasonable steps to ensure that their devices are not used to spy on them or steal their identity.

If the FTC succeeds against D-Link, consumers may also think it reasonable that their devices should be protected against botnets, too.

Of course, any successful action by the FTC will only be relevant to IoT devices sold and installed in the US. But the threat of an FTC investigation certainly will get the attention of hardware vendors who operate internationally and need to convince consumers that they can be trusted on security.