Liability for Smart Home Failures Big Issue as Market Advances, IoT Evolution Expo Told

American Family Insurance was cited as one insurance company that has promoted the use of smart home products for home protection. That prompted a question from an audience member on IoT companies’ liability if a smart home product fails.

Brett Jurgens, CEO of Notion, an early stage startup planning next month to launch an eight-way sensor that notifies consumers of conditions in the home, responded by comparing the situation to owning a car. “You are taking a risk in driving a car, and it’s not necessarily the car company’s fault [if there is a problem]. If our product doesn’t detect a smoke alarm going off, I could make the argument, ‘Well, you didn’t have our product in the first place, and the smoke alarm didn’t go off … who’s liable?’” If a Notion sensor doesn’t detect a smoke alarm going off, “What are we liable for?” asked Jurgens.

The Notion sensor provides “awareness” and allows consumers to do things they couldn’t do before with doors, windows and smoke alarms, said Jurgens, plus other critical things including temperature and water detection. A company video targeted to consumers said a Notion sensor constantly monitors the home, providing insights “exactly when you need them.” Notion "is designed to give you peace of mind,” it said, and can alert a person to situations including water leaks, temperature changes, a smoke alarm going off or the opening of a wine refrigerator.

The questioner said Notion is selling consumers a product with the promise of certain functionality and will be relying on the company to deliver a product that works. “The way we look at it is that we are adding a data layer to your house. We are adding information about what’s happening,” Jurgens responded. “If you don’t have our product in your house and your smoke alarm goes off today, nothing happens. Your house burns down.”

At the same time, Jurgens said, “There are situations which we in the future could absolutely be seen as held liable for not providing an alert about something. If our sensor provides you an alert and you don’t check your phone for 30 minutes and your house burns down before you can call the fire department, that could potentially be our fault,” he conceded. That’s an inherent risk the company is willing to take, he said. He said Notion doesn’t directly call emergency responders but gets information to the homeowner “to empower you to do those things.” The company could add an emergency response contact feature in the future, he said.

Underscoring the murkiness on liability, Jurgens said, “There are going to be issues for us and other companies that claim we can provide you certain amounts of data that when we don’t, there could be problems,” he said. “It’s a tough question; it’s a good question.”

Shane Dyer, president of Arrayent, an IoT platform provider with clients including Chamberlain, Osram Sylvania and Whirlpool, said his company has to deal with liability questions with “some of the biggest brands in the world.” Arrayent has brought out between 75 and 100 SKUs in the IoT. Some were very good and some were “learning experiences.” One of the things that slows down Arrayent clients most on IoT is that “their brand is on the line,” said Dyer. As much as IoT companies would like to believe consumers are forgiving that “computer things are not going to work sometimes,” they aren't, he said. Consumers “expect the same reliability and the same lack of failure that the regular unconnected product had. You’re just not going to change that perception,” he said.

To ensure reliability, “you end up putting an incredible amount of time engineering the platform for layers of redundancy, for failover between data centers,” said Dyer. A platform provider needs to understand all the negative use cases and put “interlocks” in products so that “bad things don’t happen when connectivity is out.” Many of those protections are built into the Arrayent platform from the beginning, he said. Consumers have “such high expectations for what products will do and how reliable they will be, especially if they bring them in their home,” he said. That process can delay time to market. “You have to be very careful in the development cycle,” he said, “but if you nail it, there’s so much more consumer trust there.”

Homes are “special” and not like other IoT environments where consumers’ safe havens aren’t on the line, said Dyer. “One security slip-up and there’s an amazing amount of press around that,” he said. “The security holes are there and we’re not talking about it enough.” Security is something “that you can’t peanut butter on an existing platform and hope to get there,” he said. It has to be designed from Day One, he said. Unintended operation of a washing machine could destroy the appliance or damage the house, he said.

Use cases have to be “elegant and simple,” said Dyer, but in many cases, in the name of security, companies are adding layers of computing when in reality “maybe one-tenth the code is actually doing anything, and the other nine-tenths is kind of sitting out there waiting to be hacked.” He cited the IT loads applied to data centers and then translating the same level of security to the home, which could have 50-100 devices that would be impossible to manage from an IT perspective. Security protocols should be appropriate to the size of the device, and companies should be careful about the amount of complexity being added to devices, he said. Arrayent’s philosophy is to manage that complexity in the cloud.

Jurgens of Notion said it’s hard “to justify sometimes spending a whole lot of time, effort and money on security.” That doesn’t accomplish the end goal of the product, he said. But when the company began building prototypes for real-world use cases, it began to consider the ramifications of what personal data is made available. “If our device is on a door, I can tell you if it opens or closes,” he said. “If somebody hacked into the system, could it tell you if somebody’s home or not? Potentially,” he said. Someone could control a Nest thermostat or turn on a washing machine and flood a house. “All those things are scary propositions, but that’s why even we’ve spent a lot of money and time thinking about how to secure all of the transmissions from our hardware devices as a starting point all the way into our back end,” he said.

The industry needs to develop a set of best practices for security, said Jurgens, which will take time. “Companies like us won’t have a choice but to follow,” he said. “If we have a security breach early on with our product, as a small company, it could destroy us. The amplification of the news could destroy us.”

IoT Evolution Expo Notebook

Awareness is the major barrier impeding faster adoption of GPS vehicle tracking services in the consumer market, Spireon spokesman Steve Johansson told us Wednesday. The company, which provides GPS tracking through its open connected vehicle platform for enterprise, fleet and the consumer aftermarket sectors, just passed 2.4 million subscribers to become the largest aftermarket vehicle telematics company, said Johansson. Cost also is likely an issue, with yearly subscription rates of $119, plus installation of a tracking module. The company hopes to relieve the cost pain for consumers through relationships with insurance providers and UBI (usage-based insurance) programs that give consumers discounts based on driving behavior. Being able to track vehicle location with an app is valuable to drivers in the case of theft or when keeping tabs on teenagers, he said. Insurers get the benefit of rich data on driving behavior, he said.