The U.S. Federal Trade Commission filed a lawsuit against D-Link on Thursday, accusing the company of failing to take steps to protect its routers and internet-linked security cameras from hackers.
D-Link said in a statement it would "vigorously defend itself against the unwarranted and baseless charges".
The FTC "fails to allege, as it must, that actual consumers suffered or are likely to suffer actual substantial injuries," it added.
Concerns about security of internet-connected devices have surged since last year when hackers used compromised routers, webcams and other electronic devices to launch a series of increasingly powerful attacks that severed access to some of the world's biggest websites.
Security experts blamed those attacks on lax security in large numbers of IoT devices from dozens of manufacturers.
The FTC's complaint alleged that D-Link neglected to protect the devices from "widely known and reasonably foreseeable risks of unauthorized access," even as it highlighted security features in communications with consumers.
The FTC asked the U.S. District Court for the Northern District of California to order D-Link to improve its security practices and to pay the agency's legal costs.