An increase in Internet-connected devices in homes is causing privacy problems.

By Jeff John Roberts
May 23, 2017

What do a doll, a popular set of headphones, and a sex toy have in common? All three items allegedly spied on consumers, creating legal trouble for their manufacturers.

In the case of We-Vibe, which sells remote-control vibrators, the company agreed to pay $3.75 million in March to settle a class-action suit alleging that it used its app to secretly collect information about how customers used its products. The audio company Bose, meanwhile, is being sued for surreptitiously compiling data—including users’ music-listening histories—from headphones.

A pair of Bose QuietComfort 35 headphones, taken on August 23, 2016.
MacFormat Magazine via Getty Images

For consumers, such incidents can be unnerving. Almost any Internet-connected device—not just phones and computers—can collect data. It’s one thing to know that Google is tracking your queries, but quite another to know that mundane personal possessions may be surveilling you too.

So what’s driving the spate of spying? The development of ever-smaller microchips and wireless radios certainly makes it easy for companies to do. But as the margins on consumer electronics grow ever thinner, you can’t blame companies for investigating new business models based on data, not just on devices.

All it takes is to persuade people to tether an object—sex toys included—to a smartphone app. That app can then track how the product is used, and relay the information to the manufacturer.

Privacy advocates see a troubling trend in all this. If companies keep this up, they could face a backlash. In the case of Genesis Toys, which sold a doll and a robot that collected recordings of kids’ voices, the company is not just facing U.S. government investigations. German regulators told parents to destroy the toys.

Genesis Toys did not respond to requests for comment.

The talking doll "My Friend Cayla" is displayed at the DreamToys toy fair in central London, on November 5, 2014.
Leon Neal — AFP/Getty Images

According to Jay Edelson, whose law firm has filed dozens of privacy class-action suits against connected device makers, judges have become more sympathetic to privacy claims. In his view, many of the privacy concerns arise because product engineers add data-collection features without telling their legal departments.

In most cases, companies can probably avoid trouble by disclosing to customers what they’re doing. Usually, all that requires is updating their privacy policies, according to Jeffrey Neuburger, a privacy lawyer at Proskauer Rose.

We-Vibe.
PRNewsFoto/We-Vibe

But there’s also the question of whether companies are justified in collecting the data in the first place. In the case of the Bose headphones, many users say the app provides no value. (Bose has ­denied wrongdoing and claims, as other firms do, that its data collection improves the use of its products.)

In any event, the controversies over “spying” products are unlikely to end anytime soon.

Says Neuburger: “We’ll see companies use more innovative approaches when it comes to collecting user data—and I think we’ll also see more litigation.”

A version of this article appears in the June 1, 2017 issue of Fortune.

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