On the Money

Smart gadgets boom, meaning buyers should 'beware' of privacy and hacking risks

Key Points
  • With more than 8 billion 'smart' devices dotting the landscape this year, Recode's Ed Lee explains why buyers have to be careful.
  • Smart toys are a hot item, but adults need to supervise kids using them, Lee explained.
  • Consumers have to be savvier about how these devices work, he added.
Listening in
VIDEO2:4602:46
Listening in

Whether or not consumers are buying an Internet-enabled toy or an Amazon Echo as a gift this season, the world is becoming increasingly connected through smart devices.

Even with all its virtues, that same trend could leave you prone to hackers.

About 8.4 billion "Web-connected things" will be in use worldwide this year according to estimates from research firm Gartner. That's up 31 percent from 2016, and will reach 20.4 billion by 2020. That explosion is leaving consumers at risk of being breached.

"An Internet connected toy, it sounds cool and it has a lot of great features, but that just means it's another entry point for a hacker to get in," Ed Lee, managing editor of tech site Recode, told CNBC's "On the Money" in an interview.

"It's very much buyer beware. You have to be aware of exactly what the toy can do," Lee added.

In order to play it safe, Lee recommended that parents or a guardian supervise kids playing with the toy, and make sure they are using it the way it's intended.

Also, the tech editor said to make sure to "turn off the toy, take the batteries out, whatever it might be, so that it's not something that can turn on by itself." Finally, he advised people to educate themselves on what the toys can do.

"Does it have a camera, a microphone, is it GPS enabled?" Lee asked. "These are all potentially dangerous things."

Consumer beware

The Amazon Echo Spot shows the weather
Todd Haselton | CNBC

When it comes to other devices like Amazon Echos, smart TVs and smartphones, Lee told CNBC, "It's up to the consumer to be [savvier] about how the world works around you."

Smart devices offer users a sense of convenience and ease of use, but experts say many consumers fail to properly set up new devices. So is the convenience worth the price of security?

Lee said the benefits outweigh the cost, but he added that developers in Silicon Valley need to be considering security concerns from the outset.

"Are [developers] really taking an extra step to really think about how these things are going to be used? How they could be exploited?" Lee asked. "That's something they are still coming to grips with."

Therefore, Lee stated people should approach these devices thinking that someone is trying to hack it. He said that "you'll be that much smarter, you'll be that much savvier as a consumer."

At the same time, Lee said Congress should build new laws to help protect consumers, especially as the world moves toward a new wave of what he called "ambient computing."

"You're not going to necessarily have desktops everywhere, but every device is going to have some computing element, and it's going to have a connection to the Internet," he said.

He suggested device users will need to be more aware of the capabilities of their devices, and take the necessary precautions.

On the Money airs on CNBC Saturdays at 5:30 am ET, or check listings for air times in local markets.