Vizio Agrees to $2.2M Settlement to Resolve FTC Complaint Over "Smart TV" Data Collection

YTJia_William Wang_LeEco_VIZIO - Publicity - H 2016
Jeff Lewis/AP/Courtesy of LeEco

YTJia_William Wang_LeEco_VIZIO - Publicity - H 2016

One step forward and two steps back?

The Federal Trade Commission on Monday revealed that it had come to a $2.2 million settlement with Vizio, one of the biggest makers of internet-connected televisions. The deal to end a complaint over how 11 million "smart" TVs collected and disseminated the viewing data of its users, however, could be vestiges of a previous administration and may showcase how the consumer protection agency now intends to take a less active role in policing privacy.

That's because along with a stipulated order — which besides a monetary settlement requires Vizio to disclose and obtain affirmative express consent when it wishes to collect and share data — FTC acting chairman Maureen Ohlhausen has issued a noteworthy concurring statement.

There, she addressed the aspect of the FTC's complaint that objected to how Vizio had allegedly used technology to unfairly track the "sensitive television viewing activity" of consumers across different platforms.

"We have long defined sensitive information to include financial information, health information, Social Security Numbers, information about children, and precise geolocation information," writes Ohlhausen. "We have also recommended that companies get opt-in consent before collecting and sharing the content of consumers’ communications. But here, for the first time, the FTC has alleged in a complaint that individualized television viewing activity falls within the definition of sensitive information."

She continues that while there may be good policy reasons to consider TV viewing data to be on par with social security numbers, the FTC "cannot 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."

Ohlhausen promises to more rigorously examine what constitutes "substantial injury" in the coming weeks.

This may be potential relief to companies like Vizio, which announced it was being acquired for $2 billion by China's LeEco last July and is still fending off a consumer class action. A more corporate-friendly balancing of injury and benefits may also be impactful if the FCC decides that broadband privacy and other topics are more appropriately addressed and adjudicated by the FTC.

Vizio sent along a statement noting that it has addressed concerns by updating its online and onscreen disclosures.

"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,” said Vizio GC Jerry Huang. “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.”