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The Promise and Pitfalls of Wearable Technology


It’s been almost impossible to avoid the constant stream of media reports discussing the pending release
of the Apple Watch. While pundits delve into details about technical specifications and pricing of the watch, it’s easy to overlook the growing trend toward wearable technology (wearables) and the role this technology may play in the lives of those using it.

Some will view these devices as expensive gadgets for tech lovers. Others believe this technology can offer important benefits to consumers, particularly in the area of health.

The what-have-yous of wearables

Wearable technologies can include everything from clothing, watches, wristbands and glasses to clip-on devices. What sets wearables apart is the wireless network connection that allows them to collect and send data while tracking the activities of those wearing them.

These devices typically communicate through connections to smartphones, tablets or computers and are one of the fastest growing segments of the Internet of Things [1]. The Consumer Electronics Association projects wearable sales will jump 61 percent in 2015 to 30.9 million units, with revenue reaching $5.1 billion.

The benefits of wearables

A PricewaterhouseCoopers (PwC) survey found over 80 percent of consumers believe using wearables can provide health benefits and serve to make technology simpler and easier to use. Another survey of consumers age 65 and older noted over 60 percent of respondents are willing to wear a health-monitoring device to track vital signs such as heart rate and blood pressure.

Consumers’ interest in using this technology to monitor their health has the potential to provide important tools for maintaining an active and healthy lifestyle. Health care experts believe wearables could play a significant role in managing costly but treatable chronic health conditions such as diabetes and cardiovascular problems.

Many consumers have concerns about using wearables

While consumers see great promise for the use of wearables, they also have concerns about this technology. The always on, always connected features of these devices are giving pause to consumers thinking about using them.

As much as consumers in the PwC survey understood the potential benefits of using wearables, they also perceived risks. Eighty-two percent of respondents worried using this technology could result in a loss of their privacy. Further, 86 percent thought using such a device would make them more vulnerable to having their personal information exposed due to security breaches.

 Addressing consumer concerns about privacy and security

To address the privacy concerns, consumers need to know what data a device collects, whether the data can be shared or sold to third parties, and what control they will have over the data.

Because many wearable devices are linkable to multiple websites, how data are treated will vary by website. As a result, consumers must read the privacy policies for each associated website to understand the privacy implications of using their wearable device. Privacy policies need to be transparent and easy to understand so consumers can make informed decisions.

Of course, privacy policies won’t matter if the device is hacked or a data breach occurs. Consumers are all too familiar with having their financial information compromised and are justly wary of having data collected by a wearable device exposed.

Developers need to design strong security protections into wearable devices to prevent hacking. In addition, robust data security measures need to be in place to prevent unauthorized access to databases where the information collected is stored.

If wearable technology is to achieve its full potential, policymakers, regulators and the technology industry need to resolve the privacy and security concerns of consumers.

[1] The Internet of Things refers to the ever-expanding array of devices that connect to external networks to send and receive information.

Image courtesy of Jasmyne Jackson


Neal Walters is a policy research senior analyst for the Financial Security Team who publishes on topics including information privacy, identity theft, affordable home utilities, prepaid cards and credit reporting.


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