Vizio has agreed to pay $2.2 million to settle federal and state government charges that its smart TVs were collecting viewing data on millions of consumers without knowledge or consent, a complaint that had alleged that TV viewing data is sensitive information.
The Federal Trade Commission and the New Jersey attorney general had alleged that 11 million TVs—dating from February 2014—had installed software to collect viewing data.
Vizio can still include the software but has to disclose and get opt-in consent from TV buyers to collect and share that data using the Smart Interactivity feature and is prohibited from misrepresenting the privacy, security or confidentiality of the information.
It has also agreed to implement a privacy program, with biennial assessments.
According to the complaint, Vizio TVs recorded second-by-second viewing information about what was being watched, including cable, broadband, set-top, DVD, over-the-air and streaming data.
The software made it easier to associate demo information with that data, then sold the information to third parties for targeted advertising.
Vizio did inform consumers that the feature allowed for "program offers and suggestions," said the FTC, but not that it enabled viewing data collection and sharing.
The $2.2 million payment includes $1.5 million to the FTC and $1 million to the New Jersey Division of Consumer Affairs, with $300,000 of that suspended.
“VIZIO is pleased to reach this resolution with the FTC and the New Jersey Division of Consumer Affairs," said General Counsel Jerry Huang. "Going forward, this resolution sets a new standard for best industry privacy practices for the collection and analysis of data collected from today’s internet-connected televisions and other home devices. “The ACR program never paired viewing data with personally identifiable information such as name or contact information, and the Commission did not allege or contend otherwise. Instead, as the Complaint notes, the practices challenged by the government related only to the use of viewing data in the ‘aggregate’ to create summary reports measuring viewing audiences or behaviors.
“Today, the FTC has made clear that all smart TV makers should get people’s consent before collecting and sharing television viewing information and VIZIO now is leading the way,” concluded Huang.
The vote to approve the settlement was 3-0, but the numbers did not tell the whole story.
Acting FTC chair Maureen Ohlhausen, who is currently the lone Republican, said in a separate concurring statement that while she agreed with the part of the decision targeted at failing to inform consumers about the data collection, she had issues with the finding that TV viewing data is sensitive information, the sharing of which without consent is likely to cause substantial harm.
"Evidence shows that consumers do not expect televisions to collect and share information about what they watch. Consumers who are aware of such practices may choose a different television or change the television’s settings to reflect their preferences. Therefore, I have reason to believe that this information is material to consumers and the failure to disclose it was deceptive or misleading."
As to TV viewing data being sensitive info, she had issues with the FTC, "for the first time:" "[alleging] in a complaint that individualized television viewing activity falls within the definition of sensitive information."
She said there may be good reasons to do so and pointed out that "Congress has protected the privacy of certain video viewing activity by passing specific laws, such as the Cable Privacy Act of 1984."
But she said that under statute, the FTC can't find a practice unfair based "primarily on public policy."
"Instead, we must determine whether the practice causes substantial injury that is not reasonably avoidable by the consumer and is not outweighed by benefits to competition or consumers."
She said it is that "substantial industry" test that needs more rigorous examination, which she promised it would get under her acting chairmanship.
“Public Knowledge commends the FTC for stepping in to protect consumers’ privacy in this clear case of deception," said Dallas Harris, policy fellow at Public Knowledge. "Most importantly, the FTC has determined that information such as consumer viewing history is in fact sensitive information that should require a consumer’s affirmative express consent before being collected. This places the FTC’s privacy framework squarely in line with the broadband privacy rules recently passed by the FCC.