Vizio Pays $2.5 Million FTC Settlement For Consumer Deception

Who is watching you when you are watching your television?

On February 6, 2017, the Federal Trade Commission (FTC) announced that VIZIO, Inc. has agreed to pay $1.5 million to the FTC and $1 million to the New Jersey Attorney General’s Office to settle charges that VIZIO had installed “spy” software on its “smart” televisions and ancillary products.

According to FTC charges, VIZIO, unbeknownst to consumers, has been collecting a live stream of viewer information from televisions, cable, broadband, set-top boxes, over-the-air broadcasts, DVDs and streaming devices. VIZIO has been further accused of linking viewing data with viewer demographic information, such as age, gender, marital status, household size, education level, home ownership, and household value, and selling this data to third parties. Data aggregators have even been able to collect IP addresses from VIZIO, which allows them to match the IP addresses with particular consumers or households. The complaint also alleges that VIZIO sold this aggregated information to third parties, some of which are targeted advertisers.

The offending feature of the software has been VIZIO’s “Smart Interactivity” feature, which was promoted to users as a way to enable program suggestions. However, VIZIO failed to disclose to consumers that this setting also enabled the collection of the viewer’s viewing data, and that such data would be aggregated with demographic information and then sold to third parties.

VIZIO is one of the world’s largest manufacturers and sellers of internet-connected “smart” televisions. It is the most popular television maker in the United States, cornering 20% of the market. One out of every five televisions used in the United States is made by VIZIO. The software has allegedly been used to collect viewing data on 11 million consumer televisions without consumers’ knowledge or consent. The issue has not been limited to newer television models; VIZIO went so far as to retrofit older televisions models remotely.

Unsurprisingly, the FTC found that such activities are “unfair and deceptive.” In addition to the $2.5 million, VIZIO is now required to: (i) delete the data collected prior to March 1, 2016; (ii) “prominently disclose and obtain affirmative express consent for its data collection and sharing practices;” and (iii) “implement a comprehensive data privacy program and biennial assessments of that program.” The settlement also specifically prohibits “misrepresentations about the privacy, security, or confidentiality of consumer information” that VIZIO collects.

The increased popularity of “smart” technology has raised new consumer protection concerns across industries. On December 7, 2016, the FTC held a Smart TV workshop specifically addressing new and unexpected threats to consumer privacy, and exploring the roles of hardware manufacturers and software developers in creating tracking technologies. This VIZIO settlement offers further insights into how the FTC will apply established consumer protection principles to “smart” technology.

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