Week 1U Discussion Privacy and Corporate Liability

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Prince George's Community College, Largo *

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413

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Business

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Nov 24, 2024

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docx

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Uploaded by seth7up.sf

CSIA 413 Week 1 Discussion: Privacy and Corporate Liability Introduction Red Clay's senior leadership team is reviewing the company's Annual Report, which the CEO will present at the next quarterly shareholder's meeting. That report includes the following risk statement: We could be liable if third- party equipment recommended and installed by us, i.e. voice-activated smart home controllers, infringes on the privacy of our residential clients. With advancing technology allowing smart devices to listen and respond to information or whatever function they provide, it is imperative to consider the potential impact to privacy as it concerns clients. It is crucial to understand how and why companies can be liable – or held responsible – due to negligence (Cornell Law School, 2022). How Does It Work Smart homes refer to a convenient home setup where appliances and devices can be automatically controlled remotely from anywhere with an internet connection using a mobile or other networked device. Devices in a smart home are interconnected through the internet, allowing the user to control functions such as security access to the home, temperature, lighting, and a home theater remotely (Hayes, 2022). Smart devices work through both microphones that listen for the user’s voice for commands and can learn through usage how a user’s daily routine occurs (Hayes, 2022). While these devices generally improve the quality of life through accessibility for users, there have been instances where hackers had gained access and companies were held liable. Instances of Liability The United States lacks severely in terms of data privacy laws and as such, the country must rely on legal loopholes to make a case. In California however, there exists the Consumer Protection Act, in which any personal information a company collects from a consumer has to be protected using appropriate technical and administrative safeguards (Nilan Johnson, 2020). This law may only benefit California residents, but it does begin to provide some accountability where Federal Law is lacking. In 2019, on December 26th, a father sued Amazon when a hacker had gained access to their Ring doorbell and had spoken to the man’s kids (Nilan Johnson, 2020). In 2020, on January 3rd, another hacker gained access and spied on kids in Mississippi, harassing and tormenting an 8-year- old girl (Nilan Johnson, 2020). In both cases, the hackers had gained access to devices through vulnerabilities. Companies can be held liable for these deficiencies if they do not patch these egregious violations. In a civil case, a defendant can be found liable if their actions, or in this case inactions, allow for a 3rd party to exploit vulnerabilities (Cornell Law School, 2022). This would severely impact Red Clay if found liable. Not only would Red Clay suffer financially, but the soiled reputation of the company from the outcome of the civil lawsuit could cause a loss of confidence from customers and would destroy the company in the long run (Sucher & Gupta, 2019). It is important to understand why a company would want to collect data from users and how that data is stored and protected. Summary To summarize, Red Clay must evaluate all technological decisions when pairing with third-party equipment when it comes to privacy. It may be advantageous to have such efficiency, however, it pays to be conscious of what the company can be held liable for should a third party experience a loss of privacy, and how Red Clay can be held liable. Researching how smart devices work and how companies patch vulnerabilities will aid in the decision to pair with other companies that allow for third-party utilization of smart technology.

References Cornell Law School. (2022, June). Liability. Retrieved from Cornell Law School Legal Information Institute: https://www.law.cornell.edu/wex/liability Hayes, A. (2022, September 14). Smart Home: Definition, How They Work, Pros and Cons. Retrieved from Investopedia: https://www.investopedia.com/terms/s/smart-home.asp Nilan Johnson. (2020, January 28). RECENT IOT CLASS ACTIONS HIGHLIGHT NEED FOR MANUFACTURERS & VENDORS OF CONNECTED PRODUCTS TO BE AWARE OF LIABILITY RISKS. Retrieved from Nilan Johnson Lewis: https://nilanjohnson.com/recent-iot-class-actions-highlight-need-for-manufacturers-vendors-of-connected- products-to-be-aware-of-liability-risks/ Sucher, S., & Gupta, S. (2019, July 16). The Trust Crisis. Retrieved from Harvard Business Review: https://hbr.org/2019/07/the-trust-crisis

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Week 1U Discussion Privacy and Corporate Liability

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