I had a letter to the editor published in Nature on big data and privacy.
Nature 519, 414 (26 March 2015) doi:10.1038/519414a
Published online 25 March 2015
Letter as published
Privacy issues around data protection often inspire over-engineered responses from scientists and technologists. Yet constraints on the use of personal data mean that privacy is less about what is done with information than what is not done with it. Technology such as new algorithms may therefore be unnecessary (see S. Aftergood, Nature 517, 435–436; 2015).
Technology-neutral data-protection laws afford rights to individuals with respect to all data about them, regardless of the data source. More than 100 nations now have such data-privacy laws, typically requiring organizations to collect personal data only for an express purpose and not to re-use those data for unrelated purposes.
If businesses come to know your habits, your purchase intentions and even your state of health through big data, then they have the same privacy responsibilities as if they had gathered that information directly by questionnaire. This is what the public expects of big-data algorithms that are intended to supersede cumbersome and incomplete survey methods. Algorithmic wizardry is not a way to evade conventional privacy laws.
Constellation Research, Sydney, Australia.
Yawn. Alexander Nazaryan in Newsweek (March 22) has penned yet another tirade against privacy.
His column is all strawman. No one has ever said privacy is more important than other rights and interests. The infamous Right to be Forgotten is a case in point -- the recent European ruling is expressly about balancing competing interests, around privacy and public interest. All privacy rules and regulations, our intuitions and habits, all concede there may be over-riding factors in the mix.
So where on earth does the author and his editors get the following shrill taglines from?
- "You’re 100% Wrong About Privacy"
- "Our expectation of total online privacy is unrealistic and dangerous"
- "Total privacy is a dangerous delusion".
It is so tiresome that we advocates have to keep correcting grotesque misrepresentations of our credo. The right to be let alone was recognised in American law 125 years ago, and was written into the UN International Covenant on Civil and Political Rights in 1966. Every generation witnesses again the rhetorical question "Is Privacy Dead?" (see Newsweek, 27 July 1970). The answer, after fifty years, is still "no". The very clear trend worldwide is towards more privacy regulation, not less.
Funnily enough, Nazaryan makes a case for privacy himself, when he reminds us by-the-by that "the feds do covertly collect data about us, often with the complicity of high-tech and telecom corporations" and that "any user of Google has to expect that his/her information will be used for commercial gain". Most reasonable people look to privacy to address such ugly imbalances!
Why are critics of privacy so coldly aggressive? If Nazaryan feels no harm comes from others seeing him searching porn, then we might all admire his confidence. But is it any of his business what the rest of us do in private? Or the government's business, or Google's?
Privacy is just a fundamental matter of restraint. People should only have their personal information exposed on a need-to-know basis. Individuals don't have to justify their desire for privacy! The onus must be on the watchers to justify their interests.
Why do Alexander Nazaryan and people of his ilk so despise privacy? I wonder what political or commercial agendas they have to hide?
Posted in Privacy
The Australian Payments Clearing Association (APCA) releases card fraud statistics every six months for the preceding 12m period. Lockstep monitors these figures and plots the trend data. We got a bit too busy in 2014 and missed the last couple of APCA releases, so this blog is a catch up, summarising and analysing stats from calendar year 2013 and AU financial year 2014 (July 2013 to June 2014).
In the 12 months to June 2014,
- Total card fraud rose by 22% to A$321 million
- Card Not Present (CNP) fraud rose 27% to A$256 million
- CNP fraud now represents 80% of all card fraud.
APCA is one of the major payments systems regulators in Australia. It has only ever had two consistent things to say about Card Not Present fraud. First, it reassures the public that CNP fraud is only rising because online shopping is rising, implying that it's really not a big deal. Second, APCA produces advice for shoppers and merchants to help them stay safe online.
I suppose that in the 1950s and 60s, when the road toll started rising dranatically and car makers we called on to improve safety, the auto industry might have played down that situation like APCA does with CNP fraud. "Of course the road toll is high" they might have said; "it's because so many people love driving!". Fraud is not a necessary part of online shopping; at some point payments regulators will have to tell us, as a matter of policy, what level of fraud they think is actually reasonable, and start to press the industry to take action. In absolute terms, CNP fraud has ballooned by a factor of 10 in the past eight years. The way it's going, annual online fraud might overtake the cost of car theft (currently $680 million) before 2020.
As for APCA's advice for shoppers to stay safe online, most of it is nearly useless. In their Christmas 2014 media release (PDF), APCA suggested:
Consumers can take simple steps to help stay safe when shopping online including:
- Only providing their card details on secure websites – looking for the locked padlock.
- Always keeping their PC security software up-to-date and doing a full scan often.
The truth is very few payment card details are stolen from websites or people's computers. Organised crime targets the databases of payment processors and big merchants, where they steal the details of tens of millions of cardholders at once. Four of the biggest ever known credit card breaches occurred in the last 18 months (Ref: DataLossDB):
- 109,000,000 credit cards - Home Depot, September 2014
- 110,000,000 credit cards - Target, December 2013
- 145,000,000 credit cards - eBay, May 2014
- 152,000,000 credit cards - Adobe, Oct 2013.
In its latest Data Breach Investigations Report, Verizon states that "2013 may be remembered as ... a year of transition to large-scale attacks on payment card systems".
Verizon has plotted the trends in data breaches at different sources; it's very clear that servers (where the datsa is held) have always been the main target of cybercriminals, and are getting proportionally more attention year on year. Diagrag at right from Verizon Data Breach Investigations Report 2014.
So APCA's advice to look for website padlocks and keep anti-virus up-to-date - as important as that may be - won't do much at all to curb payment card theft or fraud. You might never have shopped online in your life, and still have your card details stolen, behind your back, at a department store breach.
Over the course of a dozen or more card fraud reports, APCA has had an on-again-off-again opinion of the credit card scheme's flagship CNP security measure, 3D Secure. In FY2011 (after CNP fraud went up 46%), APCA said "retailers should be looking at a 3D Secure solution for their online checkout". Then in their FY2012 media release, as losses kept increasing, they made no mention of 3D Secure at all.
Calendar year 2012 saw Australian CNP fraud fall for the first time ever, and APCA was back on the 3D Secure bandwagon, reporting that "The drop in CNP fraud can largely be attributed to an increase in the use of authentication tools such as MasterCard SecureCode and Verified by Visa, as well as dedicated fraud prevention tools."
Sadly, it seems 2012 was a blip. Online fraud for FY2014 (PDF) has returned to the long term trend. It's impossible to say what impact 3D Secure has really had in Australia, but penetration and consumer awareness of this technology remains low. It was surprising that APCA previously rushed to attribute a short-term drop in fraud to 3D Secure; that now seems overly optimistic, with CNP frauds continuing to mount after all.
In my view, it beggars belief the payments industry has yet to treat CNP fraud as seriously as it did skimming and carding. Technologically, CNP fraud is not a hard problem. It's just the digital equivalent of analogue skimming and carding, and it could be stopped just as effectively by using chips to protect cardholder data, just as they do in Card Present payments, whether by EMV card or NFC mobile devices.
In 2012, I published a short paper on this: Calling for a Uniform Approach to Card Fraud Offline and On (PDF).
The credit card payments system is a paragon of standardisation. No other industry has such a strong history of driving and adopting uniform technologies, infrastructure and business processes. No matter where you keep a bank account, you can use a globally branded credit card to go shopping in almost every corner of the world. The universal Four Party settlement model, and a long-standing card standard that works the same with ATMs and merchant terminals everywhere underpin seamless convenience. So with this determination to facilitate trustworthy and supremely convenient spending in every corner of the earth, it’s astonishing that the industry is still yet to standardise Internet payments. We settled on the EMV standard for in-store transactions, but online we use a wide range of confusing and largely ineffective security measures. As a result, Card Not Present (CNP) fraud is growing unchecked.
This article argues that all card payments should be properly secured using standardised hardware. In particular, CNP transactions should use the very same EMV chip and cryptography as do card present payments.
In May 2014, the European Court of Justice (ECJ) ruled that under European law, people have the right to have certain information about them delisted from search engine results. The ECJ ruling was called the "Right to be Forgotten", despite it having little to do with forgetting (c'est la vie). Shortened as RTBF, it is also referred to more clinically as the "Right to be Delisted" (or simply as "Google Spain" because that was one of the parties in the court action). Within just a few months, the RTBF has triggered conferences, public debates, and a TEDx talk.
Google itself did two things very quickly in response to the RTBF ruling. First, it mobilised a major team to process delisting requests. This is no mean feat -- over 200,000 requests have been received to date; see Google's transparency report. However it's not surprising they got going so quickly as they already have well-practiced processes for take-down notices for copyright and unlawful material.
Secondly, the company convened an Advisory Council of independent experts to formulate strategies for balancing the competing rights and interests bound up in RTBF. The Advisory Council delivered its report in January; it's available online here.
I declare I'm a strong supporter of RTBF. I've written about it here and here, and participated in an IEEE online seminar. I was impressed by the intellectual and eclectic make-up of the Council, which includes a past European Justice Minister, law professors, and a philosopher. And I do appreciate that the issues are highly complex. So I had high expectations of the Council's report.
Yet I found it quite barren.
Recap - the basics of RTBF
EU Justice Commissioner Martine Reicherts in a speech last August gave a clear explanation of the scope of the ECJ ruling, and acknowledged its nuances. Her speech should be required reading. Reicherts summed up the situation thus:
- What did the Court actually say on the right to be forgotten? It said that individuals have the right to ask companies operating search engines to remove links with personal information about them – under certain conditions - when information is inaccurate, inadequate, irrelevant, outdated or excessive for the purposes of data processing. The Court explicitly ruled that the right to be forgotten is not absolute, but that it will always need to be balanced against other fundamental rights, such as the freedom of expression and the freedom of the media – which, by the way, are not absolute rights either.
Everyone concerned acknowledges there are tensions in the RTBF ruling. The Google Advisory Council Report mentions these tensions (in Section 3) but sadly spends no time critically exploring them. In truth, all privacy involves conflicting requirements, and to that extent, many features of RTBF have been seen before. At p5, the Report mentions that "the [RTBF] Ruling invokes a data subject’s right to object to, and require cessation of, the processing of data about himself or herself" (emphasis added); the reader may conclude, as I have, that the computing of search results by a search engine is just another form of data processing.
One of the most important RTBF talking points is whether it's fair that Google is made to adjudicate delisting requests. I have some sympathies for Google here, and yet this is not an entirely novel situation in privacy. A standard feature of international principles-based privacy regimes is the right of individuals to have erroneous personal data corrected (this is, for example, OECD Privacy Principle No. 7 - Individual Participation, and Australian Privacy Principle No. 13 - Correction of Personal Information). And at the top of p5, the Council Report cites the right to have errors rectified. So it is standard practice that a data custodian must have means for processing access and correction requests. Privacy regimes expect there to be dispute resolution mechanisms too, operated by the company concerned. None of this is new. What seems to be new to some stakeholders is the idea that the results of a search engine is just another type of data processing.
A little rushed
The Council explains in the Introduction to the Report that it had to work "on an accelerated timeline, given the urgency with which Google had to begin complying with the Ruling once handed down". I am afraid that the Report shows signs of being a little rushed.
- There are several spelling errors.
- The contributions from non English speakers could have done with some editing.
- Less trivially, many of the footnotes need editing; it's not always clear how a person's footnoted quote supports the text.
- More importantly, the Advisory Council surely operated with Terms of Reference, yet there is no clear explanation of what those were. At the end of the introduction, we're told the group was "convened to advise on criteria that Google should use in striking a balance, such as what role the data subject plays in public life, or whether the information is outdated or no longer relevant. We also considered the best process and inputs to Google’s decision making, including input from the original publishers of information at issue, as potentially important aspects of the balancing exercise." I'm surprised there is not a more complete and definitive description of the mission.
- It's not actually clear what sort of search we're all talking about. Not until p7 of the Report does the qualified phrase "name-based search" first appear. Are there other types of search for which the RTBF does not apply?
- Above all, it's not clear that the Council has reached a proper conclusion. The Report makes a number of suggestions in passing, and there is a collection of "ideas" at the back for improving the adjudication process, but there is no cogent set of recommendations. That may be because the Council didn't actually reach consensus.
And that's one of the most surprising things about the whole exercise. Of the eight independent Council members, five of them wrote "dissenting opinions". The work of an expert advisory committee is not normally framed as a court-like determination, from which members might dissent. And even if it was, to have the majority of members "dissent" casts doubt on the completeness or even the constitution of the process. Is there anything definite to be dissented from?
Jimmy Wales, the Wikipedia founder and chair, was especially strident in his individual views at the back of the Report. He referred to "publishers whose works are being suppressed" (p27 of the Report), and railed against the report itself, calling its recommendation "deeply flawed due to the law itself being deeply flawed". Can he mean the entire Charter of Fundamental Rights of the EU and European Convention on Human Rights? Perhaps Wales is the sort of person that denies there are any nuances in privacy, because "suppressed" is an exaggeration if we accept that RTBF doesn't cause anything to be forgotten. In my view, it poisons the entire effort when unqualified insults are allowed to be hurled at the law. If Wales thinks so little of the foundation of both the ECJ ruling and the Advisory Council, he might have declined to take part.
A little hollow
Strangely, the Council's Report is altogether silent on the nature of search. It's such a huge part of their business that I have to think the strength of Google's objection to RTBF is energised by some threat it perceives to its famously secret algorithms.
The Google business was founded on its superior Page Rank search method, and the company has spent fantastic funds on R&D, allowing it to keep a competitive edge for a very long time. And the R&D continues. Curiously, just as everyone is debating RTBF, Google researchers published a paper about a new "knowledge based" approach to evaluating web pages. Surely if page ranking was less arbitrary and more transparent, a lot of the heat would come out of RTBF.
Of all the interests to balance in RTBF, Google's business objectives are actually a legitimate part of the mix. Google provides marvelous free services in exchange for data about its users which it converts into revenue, predominantly through advertising. It's a value exchange, and it need not be bad for privacy. A key component of privacy is transparency: people have a right to know what personal information about them is collected, and why. The RTBF analysis seems a little hollow without frank discussion of what everyone gets out of running a search engine.
- The European Court of Justice Right to be Forgotten ruling.
- Academic commentary compiled by Julia Powles and Rebekah Larsen from Cambridge University.
- "Knowledge-Based Trust: Estimating the Trustworthiness of Web Sources" by Xin Luna Dong et al, Google.
- My analysis of search and free speech, "Free search, a misnomer"
- My analysis of search as a Big Data process, "The rite to be forgotten".
A few weeks ago, Samsung was universally condemned for collecting ambient conversations through their new voice recognition Smart TV. Yet the new Hello Barbie is much worse.
Integrating natural language processing technology from ToyTalk, Mattel's high tech update to the iconic doll is said to converse with children, will get to learn voices, and will adapt the conversation in an intelligent way.
The companies say that of all the wishes they have had for Barbie, children have longed to talk to her. So now they can, the question is, at what cost?
Mario Aguilar writing in Gizmodo considers that "voice recognition technology in Hello Barbie is pretty innocuous" because he takes Mattel's word for it that they won't use conversations they collect from kids for marketing. And he accepts ToyTalk's "statement" (which it seems has not been made public) that "Mattel will only use the conversations recorded through Hello Barbie to operate and improve our products, to develop better speech recognition for children, and to improve the natural language processing of children's speech."
It's bad enough that Samsung seems to expect Smart TV buyers will study a lengthy technical privacy statement, but do we really think it's reasonable for parents to make informed consent decisions around the usage of personal information collected from a doll?
Talk about childhood's loss of innocence.
Posted in Privacy
Search engines are wondrous things. I myself use Google search umpteen times a day. I don't think I could work or play without it anymore. And yet I am a strong supporter of the contentious "Right to be Forgotten". The "RTBF" is hotly contested, and I am the first to admit it's a messy business. For one thing, it's not ideal that Google itself is required for now to adjudicate RTBF requests in Europe. But we have to accept that all of privacy is contestable. The balance of rights to privacy and rights to access information is tricky. RTBF has a long way to go, and I sense that European jurors and regulators are open and honest about this.
One of the starkest RTBF debating points is free speech. Does allowing individuals to have irrelevant, inaccurate and/or outdated search results blocked represent censorship? Is it an assault on free speech? There is surely a technical-legal question about whether the output of an algorithm represents "free speech", and as far as I can see, that question remains open. Am I the only commentator suprised by this legal blind spot? I have to say that such uncertainty destabilises a great deal of the RTBF dispute.
I am not a lawyer, but I have a strong sense that search outputs are not the sort of thing that constitutes speech. Let's bear in mind what web search is all about.
Google search is core to its multi-billion dollar advertising business. Search results are not unfiltered replicas of things found in the public domain, but rather the subtle outcome of complex Big Data processes. Google's proprietary search algorithm is famously secret, but we do know how sensitive it is to context. Most people will have noticed that search results change day by day and from place to place. But why is this?
When we enter search parameters, the result we get is actually Google's guess about what we are really looking for. Google in effect forms a hypothesis, drawing on much more than the express parameters, including our search history, browsing history, location and so on. And in all likelihood, search is influenced by the many other things Google gleans from the way we use its other properties -- gmail, maps, YouTube, hangouts and Google+ -- which are all linked now under one master data usage policy.
And here's the really clever thing about search. Google monitors how well it's predicting our real or underlying concerns. It uses a range of signals and metrics, to assess what we do with search results, and it continuously refines those processes. This is what Google really gets out of search: deep understanding of what its users are interested in, and how they are likely to respond to targeted advertising. Each search result is a little test of Google's Artificial Intelligence, which, as some like to say, is getting to know us better than we know ourselves.
As important as they are, it seems to me that search results are really just a by-product of a gigantic information business. They are nothing like free speech.
I'm going to assume readers know what's meant by the "Creepy Test" in privacy. Here's a short appeal to use the Creepy Test sparingly and carefully.
The most obvious problem with the Creepy Test is its subjectivity. One person's "creepy" can be another person's "COOL!!". For example, a friend of mine thought it was cool when he used Google Maps to check out a hotel he was going to, and the software usefully reminded him of his check-in time (evidently, Google had scanned his gmail and mashed up the registration details next time he searched for the property). I actually thought this was way beyond creepy; imagine if it wasn't a hotel but a mental health facility, and Google was watching your psychiatric appointments.
In fact, for some people, creepy might actually be cool, in the same way as horror movies or chilli peppers are cool. There's already an implicit dare in the "Nothing To Hide" argument. Some brave souls seem to brag that they haven't done anything they don't mind being made public.
Our sense of what's creepy changes over time. We can get used to intrusive technologies, and that suits the agendas of infomoplists who make fortunes from personal data, hoping that we won't notice. On the other hand, objective and technology-neutral data privacy principles have been with us for over thirty years, and by and large, they work well to address contemporary problems like facial recognition, the cloud, and augmented reality glasses.
Using folksy terms in privacy might make the topic more accessible to laypeople, but it tends to distract from the technicalities of data privacy regulations. These are not difficult matters in the scheme of things; data privacy is technically about objective and reasonable controls on the collection, use and disclosure of personally identifiable information. I encourage anyone with an interest in privacy to spend time familiarising themselves with common Privacy Principles and the definition of Personal Information. And then it's easy to see that activities like Facebook's automated face recognition and Tag Suggestions aren't merely creepy; they are objectively unlawful!
Finally and most insideously, when emotive terms like creepy are used in debating public policy, it actually disempowers the critical voices. If "creepy" is the worst thing you can say about a given privacy concern, then you're marginalised.
We should avoid being subjective about privacy. By all means, let's use the Creepy Test to help spot potential privacy problems, and kick off a conversation. But as quickly as possible, we need to reduce privacy problems to objective criteria and, with cool heads, debate the appropriate responses.
See also A Theory of Creepy: Technology, Privacy and Shifting Social Norms by Omer Tene and Jules Polonetsky.
- "Alas, intuitions and perceptions of 'creepiness' are highly subjective and difficult to generalize as social norms are being strained by new technologies and capabilities". Tene & Polonetsky.
An unpublished letter to the editor of The New Yorker, February 2015.
Alec Wilkinson says in his absorbing profile of the quiet genius Yitang Zhang ("The pursuit of beauty", February 2) that pure mathematics is done "with no practical purposes in mind". I do hope mathematicians will forever be guided by aesthetics more than economics, but nevertheless, pure maths has become a cornerstone of the Information Age, just as physics was of the Industrial Revolution. For centuries, prime numbers might have been intellectual curios but in the 1970s they were beaten into modern cryptography. The security codes that scaffold almost all e-commerce are built from primes. Any advances in understanding these abstract materials impacts the Internet itself, for better or for worse. So when Zhang demurs that his result is "useless for industry", he's mispeaking.
The online version of the article is subtitled "Solving an Unsolvable Problem". The apparent oxymoron belies a wondrous pattern we see in mathematical discovery. Conundrums widely accepted to be impossible are in fact solved quite often, and then frenetic periods of innovation usually follow. The surprise breakthrough is typically inefficient (or, far worse in a mathematician's mind, ugly) but it can inspire fresh thinking and lead to polished methods. We are in one of these intense creative periods right now. Until 2008, it was widely thought that true electronic cash was impossible, but then the mystery figure Satoshi Nakamoto created Bitcoin. While it overturned the conventional wisdom, Bitcoin is slow and anarchic, and problematic as mainstream money. But it has triggered a remarkable explosion of digital currency innovation.
A published letter
As Alec Wilkinson points out in his Profile of the math genius Yitang Zhang, results in pure mathematics can be sources of wonder and delight, regardless of their applications. Yet applications do crop up. Nineteenth-century mathematicians showed that there are geometries as logical and complete as Euclidean geometry, but which are utterly distinct from it. This seemed of no practical use at the time, but Albert Einstein used non-Euclidean geometry to make the most successful model that we have of the behavior of the universe on large scales of distance and time. Abstract results in number theory, Zhang’s field, underlie cryptography used to protect communication on devices that many of us use every day. Abstract mathematics, beautiful in itself, continually results in helpful applications, and that’s pretty wonderful and delightful, too.
Sandy Spring, Md.
My favorite example of mathematical innovation concerns public key cryptography (and I ignore here the credible reports that PKC was invented by the Brits decades before but kept secret). For centuries, there was essentially one family of cryptographic algorithms, in which a secret key shared by sender and recipient is used to both encrypt and decrypt the protected communication. Key distribution is the central problem in so-called "Symmetric" Cryptography: how does the sender get the secret key to the recipient some time before sending the message? The dream was for the two parties to be able to establish a secret key without ever having to meet or using any secret channel. It was thought to be an unsolvable problem ... until it was solved by Ralph Merkle in 1974. His solution, dubbed "Merkle's Puzzles" was almost hypothetical; the details don't matter here but they were going to be awkward to put it mildly, involving millions of small messages. But the impact on cryptography was near instantaneous. The fact that, in theory, two parties really could establish a shared secret via public messages triggered a burst of development of practical public key cryptography, first of the Diffie-Hellman algorithm, and then RSA by Ron Rivest, Adi Shamir and Leonard Adleman. We probably wouldn't have e-commerce if it wasn't for Merkle's crazy curious maths.
This is Part 2 of my coverage of the White House #CyberSecuritySummit; see Part 1 here.
On Feb 13th, at President Obama's request, a good number of the upper echelon of Internet experts gathered at Stanford University in Silicon Valley to work out what to do next about cybersecurity and consumer protection online. The Cyber Security Summit was put together around Obama's signing a new Executive Order to create new cyber threat information sharing hubs and standards to foster sharing while protecting privacy, and it was meant to maintain the momentum of his cybersecurity and privacy legislative program.
The main session of the summit traversed very few technical security issues. The dominant theme was intelligence sharing: how can business and government share what they know in real time about vulnerabilities and emerging cyber attacks? Just a couple of speakers made good points about preventative measures. Intel President Renee James highlighted the importance of a "baseline of computing security"; MasterCard CEO Ajay Banga was eloquent on how innovation can thrive in a safety-oriented regulated environment like road infrastructure and road rules. So apart from these few deviations, the summit had a distinct military intelligence vibe, in keeping with the cyber warfare trope beloved by politicians.
On the one hand, it would be naive to expect such an event to make actual progress. And I don't mind a political showcase if it secures the commitment of influencers and builds awareness. But on the other hand, the root causes of our cybersecurity dilemma have been well known for years, and this esteemed gathering seemed oblivious to them.
Where's the serious talk of preventing cyber security problems? Where is the attention to making e-business platforms and digital economy infostructure more robust?
Personal Information today is like nitroglycerin - it has to be handled with the utmost care, lest it blow up in your face. So we have the elaborate and brittle measures of PCI-DSS or the HIPAA security rules, rendered useless by the slightest operational slip-up.
How about rendering personal information safer online, so it cannot be stolen, co-opted, modified and replayed? If stolen information couldn't be used by identity thieves with impunity, we would neutralise the bulk of today's cybercrime. This is how EMV Chip & PIN payment security works. Personal data and purchase details are combined in a secure chip and digitally signed under the customer's control, to prove to the merchant that the transaction was genuine. The signed transaction data cannot be easily hacked (thanks Jim Fenton for the comment; see below); stolen identity data is useless to a thief if they don't control the chip; a stolen chip is only good for single transactions (and only if the PIN is stolen as well) rather than the mass fraud perpetrated after raiding large databases.
It's obvious (isn't it?) that we need to do something radically different before the Internet of Things turns into a digital cesspool. The good news for privacy and security in ubiquitous computing is that most smart devices can come with Secure Elements and built-in digital signature capability, so that all the data they broadcast can be given pedigree. We should be able to know tell for sure that every piece of information flowing in the IoT has come from a genuine device, with definite attributes, operating with the consent of its owner.
The technical building blocks for a properly secure IoT are at hand. Machine-to-Machine (M2M) identity modules (MIMs) and Trusted Execution Environments (TEEs) provide safe key storage and cryptographic functionality. The FIDO Alliance protocols leverage this embedded hardware and enable personal attributes to be exchanged reliably. Only a couple of years ago, Vint Cerf in an RSA Conference keynote speculated that ubiquitous public key cryptography would play a critical role in the Internet of Things, but he didn't know how exactly.
In fact, we have have known what to do with this technology for years.
At the close of the Cyber Security Summit, President Obama signed his Executive Order -- in ink. The irony of using a pen to sign a cybersecurity order seemed lost on all concerned. And it is truly tragic.
We probably wouldn't need a cybersecurity summit in 2015 if serious identity security had been built into the cyber infrastructure over a decade ago.