As wearables become more popular, regulations protecting data are still lacking

Are you wearing a smart watch or smart ring right now? How about smart glasses or a hearing aid?

All these devices are considered wearables, and the market for them has grown exponentially in recent years—from $20 billion in 2015 to $109.3 billion in 2023.

Some of the devices, like watches and rings, collect user health data such as heart rates and blood oxygen levels. And while 75% of 1,000 of patients reported they were comfortable with their physician having access to their health data according to a July 2022 survey from the American Medical Association, 82% of 2,414 US residents in a 2022 Trusted Future study expressed concern about data privacy outside clinics.

But data privacy laws are lacking in the US compared with the European Union. The Health Insurance Portability and Accountability (HIPAA), a well-known patient privacy law that falls on hospitals and health plans, generally doesn’t apply to wearable companies.

That means that outside of the 20 US states with data privacy laws, there’s no federal requirement for wearable companies to protect health data. They can even legally sell it to third parties.

In the face of this, data privacy experts told Healthcare Brew that more transparent companies can build stronger brand loyalty among users and gain a competitive edge.

Cost of concealment

Issues with data privacy have cost many businesses, experts said.

For example, family ancestry company 23andMe, which has access to users’ DNA information, experienced a data breach in 2023 that cost them $30 million in a settlement. In March of this year, the company filed for bankruptcy.

“Consumers flock to companies that advertise and make sure that they’re fully transparent around their privacy practices,” Ron De Jesus, field chief privacy officer at data privacy company Transcend, told us.

Customers were also urged to leave period-tracking and fertility apps following the overturn of Roe v. Wade due to concerns that data about their cycles could be shared with states and law enforcement agencies.

“If they say they’re not going to share my information, [and] I later find out that they do share my information, that’s going to be a breach of trust for me, which may cause me to lose affinity for that brand,” Pat McGloin, managing director of health and life sciences at health advertising company Merge, said.

Signing off

It all comes down to user agreements. You know, those things that no one actually reads. (And by no one, we mean approximately 9% of users, according to the Pew Research Center.)

In fact, in 2012 the Atlantic reported that if people actually sat down to read these agreements, it would take each person an estimated 76 work days (based on the average length of privacy policies, an estimate of how many people agree to them, and average reading times) and cost the economy $781 billion in lost wages because of time spent reading.

That’s because they can be long and complicated, Nicky Watson, CEO and founder of UK-based tech company Syrenis, told Healthcare Brew. “When you have a bottle of water you want to know that it’s safe to drink. You don’t want to have to be a chemist to test the water to find out if it’s safe to drink,” she said.

The agreements often don’t give users any flexibility to negotiate the terms, either. It’s a yes-or-no answer, and if you already bought the device, you are more likely to say yes, Watson added.

Ultimately though, experts like McGloin say more transparency is the way to go.

This means there’s an opportunity for companies to go beyond regulations, be more transparent, and build brand trust for a competitive advantage, McGloin said. About 88% of 13,802 adults across 14 countries reported they consider brand trust before making a purchase.

Apple, for example, has long user agreements, but allows users to go back in and adjust settings to prevent information from being shared with other companies, Watson said.

“Brands that are transparent, that prioritize trust and building a relationship with you, they actually have the business advantage,” Watson said. “You’re much more likely to stick with who you trust, build on that, and potentially give them more information.”