Vizio has agreed to a significant settlement, after a complaint filed by the US Federal Trade Commission (FTC) and the New Jersey Attorney General alleged that the company had collected extensive information about users' activities on their smart TVs without their explicit knowledge, and sold that information to third parties. In a blog post, the FTC said that "consumers didn't know that while they were watching their TVs, Vizio was watching them".
The FTC explained what was happening, according to the complaint:
On a second-by-second basis, Vizio collected a selection of pixels on the screen that it matched to a database of TV, movie, and commercial content. What’s more, Vizio identified viewing data from cable or broadband service providers, set-top boxes, streaming devices, DVD players, and over-the-air broadcasts. Add it all up and Vizio captured as many as 100 billion data points each day from millions of TVs.
Furthermore, the FTC and New Jersey AG alleged that Vizio failed to provide sufficient information about the data it was collecting. Its tracking features were integrated into its TVs through a setting called "Smart Interactivity", but the complaint alleged that:
The generic way the company described that feature – for example, “enables program offers and suggestions” – didn’t give consumers the necessary heads-up to know that Vizio was tracking their TV’s every flicker. (Oh, and the “Smart Interactivity” feature didn’t even provide the promised “program offers and suggestions.”)
On top of that, the FTC said that "Vizio then turned that mountain of data into cash by selling consumers' viewing histories to advertisers and others." It added:
And let’s be clear: We’re not talking about summary information about national viewing trends. According to the complaint, Vizio got personal. The company provided consumers’ IP addresses to data aggregators, who then matched the address with an individual consumer or household. Vizio’s contracts with third parties prohibited the re-identification of consumers and households by name, but allowed a host of other personal details – for example, sex, age, income, marital status, household size, education, and home ownership.
In a statement to Engadget, Vizio general counsel Jerry Huang portrayed the settlement as a positive step, allowing Vizio to 'lead the way' in how users should be informed of such data collection efforts in the future:
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. 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.
According to the FTC, Vizio has now agreed to stop unauthorized tracking, to more clearly explain how it collects data on users' activities, and "to get consumers' express consent before collecting and sharing viewing information". It has also consented to the deletion of "most of the data it collected" going back as far as 2014, and to implement a privacy program to evaluate its own data collection practices and those of its partners.
As part of the settlement, Vizio will pay a total of $2.2 million, including $1.5 million to the FTC, with the remainder going to New Jersey as a civil penalty. The FTC had previously alleged that Vizio was engaging in "unfair trade practices that violated the FTC Act and were unconscionable under New Jersey law."