US Govt Punishes IP Camera Manufacturer Trendnet

By: IPVM, Published on Sep 05, 2013

IP camera manufacturer TRENDnet has settled with the FTC after the agency says the company’s advertising, combined with failure to use “reasonable security to design and test its software” resulted in unfair trade practices. Because of security flaws in more than 20 models of TRENDnet cameras, customers’ private camera feeds were available over the Internet  from devices sold to them to secure their homes, according to the FTC. In this note, we review the FTC complaint, the outcome and what the decision means for the industry. 

The Complaint Reviewed

Trendnet's camera line was, as it turns out, ironically branded "SecureView" including a logo on the packaging emphasizing:

According to the FTC complaint [link no longer available], a malfunction in the “Direct Video Stream Authentication,” a setting that controlled user credentials preferences, allowed live feeds to be accessed regardless of a user’s security settings. The feeds were initially made public after hackers exploited the flaw and posted links to “nearly 700 of the cameras” online. “The feeds displayed babies asleep in their cribs, young children playing, and adults going about their daily lives,” says the FTC. 

The FTC also says the company transmitted and stored user login credentials unencrypted, failed to implement a process monitor and assess third-party security reports (delaying the opportunity to fix flaws) and failed to do any type of security review of its software. TRENDnet released a patch shortly after the exploit. 

TRENDnet’s marketing claimed the cameras were “secure” or suitable for maintaining security, says the FTC. On its website, packaging and other advertisements, TRENDnet claimed the cameras could help protect a user’s home, family, property or business. However, because TRENDnet failed to provide security from unauthorized access to live feeds, that “caused, or [was] likely to cause, substantial injury to consumers that is not offset by countervailing benefits to consumers or competition and is not reasonably avoidable by consumers,” said the FTC in the complaint. “This practice was, and is, an unfair act or practice.”  

The Decision Reviewed

On Wednesday, the FTC announced that TRENDnet settled charges that it failed to protect its users' privacy. Although TRENDnet has acknowledged that the flaw was patched, by agreeing to a consent order it is not obligated to admit or deny any of the FTC’s complaints. 

The consent order [link no longer available] bars TRENDnet from “misrepresenting the security of its cameras or the security, privacy, confidentiality, or integrity of the information that its cameras or other devices transmit” and “misrepresenting the extent to which a consumer can control the security of information the cameras or other devices store, capture, access, or transmit.” The order covers all advertisements, promotional materials, installation and user guide, packaging, and any materials disseminated by the company. 

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It also requires the company to establish a detailed program, in writing, to address security risks and secure user information. The company must have a third-party complete periodic assessments to ensure compliance to the order every two years for the next 20 years. The report for each assessment will be delivered to the FTC. All of these documents must be made available to the FTC for inspection upon request for the next five years. 

Revenue

TRENDnet is a relatively modest player in IP camera market -- according to the complaint, the 80-person company did $5.28 million in IP cameras sales in 2011, rising to $7.4 million in 2012. Assuming a low average selling price (say $70), that would mean ~100,00 IP cameras per year, though almost all in the consumer, non VMS space. However, the potential impact this decision has on the industry is big. 

Impact on Other Manufacturers

In the last few years, the FTC has made an effort to crack down on tech manufacturers who commit privacy violations, but companies producing security technology may get more of the brunt than an app designer that reveals social media data without permission. This case should be an eye-opener for camera manufacturers who make claims about increasing safety or preventing harm. If a company is claiming their cameras can keep a person, place or thing safe, and those cameras have an issue that could negate that safety or potentially cause harm to the user, then that is an unfair trade practice, according to the FTC in this decision. Manufacturers should be more cautious about the claims they’re making and the vulnerabilities they may have. The FTC has demonstrated that they will take action.

This is all the more interesting given that the physical security industry has been historically lax in implementing information security (rampant default password use, ongoing security issues).

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