TV maker VIZIO fined $2M for no-consent tracking of consumer viewing habits

Smart TV maker VIZIO will pay a $2.2 million penalty based on the improper collection of consumer viewing habits and data without consent. The settlement comes after an action brought by the Federal Trade Commission (FTC) and the Office of the New Jersey Attorney General.

The undisclosed data collection was “deceptive” and in violation of the Federal Trade Commission Act, 15 U.S.C. § 53(b) and the New Jersey Consumer Fraud Act. VIZIO captured viewing habits and then married that data with demographic information, including sex, age, income, marital status, household size, education level and home ownership. The combined data sets were then sold to third parties for audience measurement, ad effectiveness tracking and targeting.

Here’s an excerpt of the factual allegations from the complaint (shown below):

• Since February 2014, VIZIO has manufactured televisions that continuously track what consumers are watching and transmit that information to Defendants through VIZIO Inscape Service’s proprietary ACR software, which is turned on by default . . .
• Through the ACR software, VIZIO’s televisions transmit information about what a consumer is watching on a second-by-second basis . . . Defendants have stated that the ACR software captures up to 100 billion data points each day from more than 10 million VIZIO televisions. Defendants store this data indefinitely.
• Defendants’ ACR software also periodically collects other information about the television, including IP address, wired and wireless MAC addresses, WiFi signal strength, nearby WiFi access points, and other items.
• VIZIO earns revenue by providing consumers’ television viewing history to third parties through licensing agreements. . . .

None of this was disclosed to consumers. Now, the company’s privacy policy reads:

This Privacy Policy also contains information on what has previously been referred to as Smart Interactivity, a video automated content recognition (“Video ACR”) feature on VIZIO internet-connected televisions and displays that recognizes onscreen content, and maintains a record of viewing history associated with the television or display (Viewing Data). You have the option in your television or display’s settings menu to disable this Video ACR feature, which is set to “on” by default . . .

A court order agreed to by the parties requires VIZIO “to prominently disclose and obtain affirmative express consent for its data collection and sharing practices, and prohibits misrepresentations about the privacy, security, or confidentiality of consumer information they collect.” The company must also delete any data collected before March of last year.

VIZIO is also subject to biennial privacy and compliance assessment by an independent third party approved by the FTC. The $2.2 million is being divided by  by FTC and the New Jersey Division of Consumer Affairs.

Postscript: The following statement was provided by VIZIO:

VIZIO is pleased to reach this resolution with the FTC and the New Jersey Division of Consumer Affairs. 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,” stated Jerry Huang, VIZIO General Counsel. “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.

Even before today’s resolution was announced, VIZIO had addressed the concerns by updating online and onscreen disclosures. For example, the FTC Complaint acknowledged that VIZIO has sent onscreen notifications informing users about viewing data collection, reminding users of the option to turn this feature off or on, and educating users about the purpose and nature of its viewing data program.

This resolution concludes all pending government investigations into VIZIO’s privacy practices.

About The Author

Greg Sterling

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.