Canada: Bad Security Has Bad Consequences

Last Updated: February 15 2017
Article by Lisa R. Lifshitz

In the 2002 thriller Minority Report, the pre-crime unit of the Washington police force could lawfully arrest suspects for future criminal activity based on the foreknowledge of certain psychic "pre-cogs" prior to any crime actually being committed.

I couldn't help thinking about this movie when I read that on Jan. 5, the U.S. Federal Trade Commission filed a complaint in the Northern District of California against Taiwan-based computer networking equipment manufacturer D-Link Corp. and its U.S. subsidiary, D-Link Systems, for failure to take reasonable steps to secure its wireless routers and Internet protocol cameras, potentially compromising sensitive consumer information, including live video and audio feeds from D-Link IP cameras. The FTC accused D-Link of having shoddy Internet of Things security practices, engaging in unfair or deceptive acts/practices in violation of the Federal Trade Commission Act and manufacturing, marketing and selling devices with known security vulnerabilities, failing to properly secure its products and leaving them open to hackers and putting U.S. consumers' privacy at risk.

What's fascinating about this case is that, to date, there have been no known data breaches or cyberattacks actually involving D-Link products and no consumers have experienced any damages arising from these alleged technical security vulnerabilities. Instead, the FTC proactively sued D-Link because of the potential exposure of sensitive consumer/personal information, including live video and audio feeds from D-Link IP cameras caused by D-Link's poor security designs, spurred by D-Link's allegedly untrue advertising statements touting D-Link's superior security practices.

According to the FTC's complaint, D-Link had (falsely) promoted the security of its routers in a wide range of materials available on the company's website, including its user manual and promotional brochures, which included content headlined "EASY TO SECURE," "ADVANCED NETWORK SECURITY" and "INTERACTIVE SECURITY FEATURES" in connection with its routers.

Additionally, from (approximately) December 2013 until early September 2015, D-Link had posted a "security event response policy" on its product support webpage under a bolded heading "D-Link's commitment to Product Security." The policy promised that D-Link "prohibits at all times . . . any intentional product features or behaviors which allow unauthorized access to the device or network, including but not limited to undocumented account credentials, covert communication channels, 'backdoors' or undocumented traffic diversion. All such features and behaviors are considered serious and will be given the highest priority."

Despite the security claims made by D-Link, the FTC alleged the company had failed to take reasonable steps to address well-known and easily preventable security flaws to protect their routers and IP cameras from widely known and reasonably foreseeable risks of unauthorized access, including flaws that the Open Web Application Security Project has ranked among the most critical and widespread web application vulnerabilities since at least 2007.

These included:

  • Repeatedly failing to take reasonable software testing and remediation measures to protect their routers and IP cameras against well-known and easily preventable software security flaws, including "hard-coded" user login credentials integrated into D-Link camera software (with usernames and passwords like "guest") that could allow unauthorized access to the camera's live feed;
  • Failing to remedy a software flaw known as "command injection" that could enable remote attackers to take control of consumers' routers by sending them unauthorized commands over the Internet;
  • Failing to take reasonable steps to maintain the confidentiality of the private key code used to sign in to the D-Link software, which was openly available on a public website for approximately six months; and
  • Leaving users' login credentials for D-Link's mobile app unsecured in clear, readable text on their mobile devices, even though there is free software, available since 2008, to secure the information.

Even though no compromises have actually occurred, the FTC asserted the risk that attackers would exploit these vulnerabilities to harm consumers was significant and that by creating these vulnerabilities, D-Link put consumers at significant risk of harm. For example, a hacker could compromise a consumer's router, thereby obtaining unauthorized access to sensitive personal information. Cybercriminals could re-direct consumers seeking a legitimate financial site to a spoofed website, where they would unknowingly provide the attacker with sensitive financial account information. Using a compromised router, the cybercriminal could obtain consumers' tax returns or other files stored on the router's attached storage device or could use the router to attack other devices on the local network, such as computers, smartphones, IP cameras or connected appliances.

Similarly, a cybercriminal could compromise a purchaser's IP camera, covertly monitoring their whereabouts to target them for theft or other criminal activity or to observe and record over the Internet their personal activities and conversations or those of their children. During the time D-Link's private key was available on a public website, consumers seeking to download legitimate D-Link software were at significant risk of downloading malware made available via D-Link's private key.

The FTC is not the only entity concerned about D-Link. In July, ZDNet reported that the security company Senrio had found serious security flaws in D-Link's home Wi-Fi cameras allowing hackers to overwrite administrator passwords, placing users at risk of being spied upon. The remote execution flaw not only allows attackers to set their own custom password to access devices but also add new users with admin access to the interface, download malicious firmware or reconfigure products, adding only a single line of code to compromise a device. Senrio claimed that approximately 415,000 devices are open to the web and vulnerable to attack, with more than 120 products that are recorded as open, including routers, modems, access points and storage products.

The FTC chastised D-Link on several fronts, including failure to take reasonable steps to secure the software for their routers and IP cameras ("unfair acts or practices in or affecting commerce"), engaging in "deceptive acts or practices" for security event response policy misrepresentations, IP camera promotional misrepresentations and router GUI/IP camera GUI misrepresentations (for failing to take reasonable steps to secure their products from unauthorized access). The FTC also asked for injunctive relief to prevent consumer injury and requested a permanent injunction to prevent future violations of the FTC Act by D-Link, costs and whatever additional relief the court may determine to be just and proper.

D-Link denies these allegations and on Jan. 31 moved to dismiss the case on a variety of grounds, including the fact that there is no evidence of actual or likely consumer injury, and that liability cannot be based on "unspecified and hypothetical" risk of future harm.

What are the messages for Canadian manufacturers that export IoT products into the U.S.? Several, including the fact that the FTC has IoT on its radar and has a past history of investigating security vulnerabilities in IoT devices and acting against violators (including prior actions against TRENDnet, a marketer of video cameras, and ASUS, a computer hardware manufacturer).

Any Canadian IoT device manufacturer that intends to engage in cross-border business must engage in "security by design" during all phases of product development (planning/design, implementation, testing and deployment). Also, if a company finds any security flaws during the manufacturing/development process, it should be immediately remedied rather than ignored (as alleged against D-Link). Clearly, companies that do business in the U.S. are expected to anticipate widely known threats and take reasonable steps to mitigate or avoid them. Arguably, the D-Link suit puts all lax IoT device makers on notice — potentially holding them accountable for security holes that leave businesses and consumers vulnerable to attacks. Canadian entities that do business in this space should also carefully oversee and, if necessary, reign in their sales and marketing teams so that they avoid making inaccurate, overly robust statements (or inaccurate promises) regarding the strength of the company's security measures and overall security practices.

Originally published by Canadian Lawyer Online - IT Girl Column.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Lisa R. Lifshitz
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.