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Heinous Internet Scam Perpetrated By a Refrigerator

The numbers being thrown around about the scope of the “Internet of Things” (IoT) couldn’t be more mind-boggling.

Of course, I’m talking about the “smart” tech trend, whereby everyday objects – from your toaster to your thermostat to your television, even your toilet – are connected to the internet, automatically sharing data.

Check out these stats…

  • Tech research firm Gartner predicts that we’ll see 30 billion devices connected to the internet by 2020.
  • In a keynote presentation at the 2014 Consumer Electronics Show, Cisco’s (CSCO) CEO, John Chambers, reckons we’re in store for 50 billion devices, which will open up a $19-trillion opportunity.
  • Meanwhile, IDC expects the number to top 210 billion by 2020.

You get the point. Everyone and their mother believe that the Internet of Things is going to be huge. Bigger than the mobile device boom. Even bigger than the internet itself…

“We think the Internet of [Things] is the biggest transition for the internet since the birth of the internet,” says Kip Compton, a Senior Vice President at Cisco.

Well, go ahead and cue up the old Public Enemy cassette tape. Because it’s time I told you something important…

“Don’t believe the hype!”

Why? Because a lone refrigerator (seriously) just perpetrated a heinous crime that threatens to stop this burgeoning tech trend dead in its tracks. Ironically, the renegade icebox also revealed the smartest way for investors to play the IoT boom.

Let me explain…

Wildly Insecure

As IDC rightly points out, before the IoT becomes the biggest tech trend ever, multiple hurdles must be overcome. Like the lack of communication standards, global scalability and a nascent ecosystem for application development.

But they forgot one more thing: security. And thanks to a lone refrigerator, we now know how big of a problem security promises to be.

While conducting a routine sweep between December 23, 2013 and January 6, 2014, cyber security firm, Proofpoint (PFPT), uncovered a spam attack.

In total, about 750,000 messages were sent, which in itself isn’t out of the ordinary.

What startled Proofpoint researchers, though, is the fact that 25% of the messages didn’t originate from the usual suspects (i.e., laptops, desktops, or smartphones). Instead, they came from connected devices, such as home-networking routers, televisions – and at least one refrigerator.

The significance? This represents the first proven IoT-based cyber attack. But it certainly won’t be the last.

Here Comes the Internet of Things… Or Not!

As Proofpoint’s David Knight said, “Many of these devices are poorly protected at best, and consumers have virtually no way to detect or fix infections when they do occur.”

Makes you want to rush out and buy the latest smart TV, doesn’t it?

That’s the lesson here. We can’t get sucked into the benefits or added conveniences of new technologies before we consider the potential pitfalls. In this case, they’re significant.

Or as Michael Osterman, Principal Analyst at Osterman Research, says, “The ‘Internet of Things’ holds great promise for enabling control of all of the gadgets that we use on a daily basis. It also holds great promise for cyber criminals who can use our homes’ routers, televisions, refrigerators and other internet-connected devices to launch large and distributed attacks.”

Bottom line: There’s no way this tech trend is going to launch into the stratosphere if we have to worry about our smart TV spamming our family and friends. I’m certainly not going to purchase any connected devices until the security issue is resolved, are you?

And therein lies the opportunity: Go “long” leading cyber security companies.

If that call to action sounds eerily familiar, it’s because I originally issued it back in October 2013. But in the wake of the first cyber attack perpetrated by a refrigerator, it’s all the more urgent.

In an upcoming column, I’ll share the cyber security stocks I believe hold the most upside potential. Seeing that Proofpoint detected the first IoT attack, it wouldn’t be a bad place to start (hint, hint).

Ahead of the tape,

Louis Basenese