By Steven J. Schuchart Jr. Security Security for Bluetooth devices is less than wonderful. It provides link-level security plus encryption.
Security is established after channel negotiation.
If you go with Level 3 and full encryption, the ease of use and simplicity aspects of Bluetooth begin to fade. Level 3 would require user intervention for all services. In Bluetooth, most security issues are expected to occur above the link layer, in the application or protocol layers. However, problems can occur at a purely physical level. Wireless networks are also vulnerable to passive eavesdropping attacks.