United States: VIZIO To Pay 2.2 Million To Settle Consumer Tracking Charges; FTC Treats Television Viewing History As "Sensitive Information" Requiring Notice And Opt-In Consent Outside The Privacy Policy

On February 6, 2017, the FTC and New Jersey Attorney General and Department of Consumer Affairs filed a Complaint and Stipulated Order for Permanent Injunction and Monetary Judgment against television manufacturer VIZIO, Inc., and VIZIO Inscape Services, LLC, (according to the Complaint, "a wholly-owned subsidiary of VIZIO, Inc., and the successor entity to Cognitive Media Services, Inc., which developed proprietary automated content recognition (ACR) software to detect the content on internet-connected televisions and monitors"). The FTC and New Jersey agencies alleged that, beginning in February 2014, VIZIO used ACR software in its Internet-enabled televisions to track, in fine detail, programs that consumers watched on VIZIO's connected TVs. According to the complaint, VIZIO provided this information to third parties, sometimes in combination with other information about the relevant consumers, including IP address, MAC addresses, and WiFi access points. The agencies alleged that this information enabled third parties to conduct analysis of consumers' viewing habits to determine audience measurement and the effectiveness of advertising campaigns, and to deliver advertisements based on television viewing behavior and demographic data obtained from third parties to other devices owned by the relevant consumers. The complaint also alleges that VIZIO initially failed to disclose the ACR software and its capabilities to consumers in privacy policies or in descriptions of the televisions' "Smart Interactivity" function. However, the Complaint does indicate that VIZIO eventually provided a pop-up notice to consumers of its tracking activities in March 2016, after the investigation began.

The complaint alleges that, under Section 5 of the FTC Act and section 56:8-2 of the New Jersey Consumer Fraud Act, VIZIO's tracking activities were unfair and that the failure to describe them in privacy policies and in other notices amounted to a deceptive omission. The complaint also charges that VIZIO further deceived consumers by failing to offer promised "program offers and suggestions" via the "Smart Interactivity" feature. VIZIO did not admit or deny the allegations in the complaint.

To settle the allegations, VIZIO will pay $1.5 million to the FTC—presumably under the equitable theory of disgorgement of ill-gotten gains—and $1 million (payment of $300,000 of this amount will be suspended) to the New Jersey agencies in civil penalties (pursuant to N.J. Stat. Ann. § 56:8-13) and reimburse the New Jersey agencies for attorney fees and investigative costs (pursuant to N.J. Stat. Ann. § 56:8-11, -19). Notably, the use of the FTC's equitable powers under Section 5 to seek monetary relief in privacy cases is uncommon—Ashley Madison was required to pay over $800,000 in 2016 (with an additional almost $8 million dollars suspended). Most FTC privacy settlements have included injunctive relief only. In addition, VIZIO will be required to delete any viewing data it collected from consumers before March 1, 2016 (a date selected presumably because of the pop-up notice VIZIO provided to consumers after the investigation began), unless the consumer has provided affirmative consent or the data's preservation is otherwise required by law. (Vizio is a defendant in multidistrict litigation in the Central District of California based on its collection and sharing of consumers' television viewing behavior).

Notably, the FTC and the New Jersey Attorney General and Department of Consumer Affairs treated TV viewing data as sensitive personal information, adding it to the existing list of sensitive personal information the FTC outlined in its 2012 Privacy Report (health data, financial data, Social Security Numbers, precise geolocation data, and data regarding children) for the first time. Accordingly, going forward, VIZIO must obtain consumers' consent—via a "prominent" notice ("prominently" is defined in the Order to mean that "a required disclosure is difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers"; thus, outside of its standard privacy policy or other terms and conditions)—to the collection, use, and sharing of any consumer viewing data. VIZIO will also be required implement an effective opt-out mechanism for consumers who do not wish to have their viewing data collected.

In addition to these requirements, VIZIO must also implement a comprehensive privacy program, submit to third-party privacy assessments for 20 years, and engage in standard compliance reporting and record-keeping. To implement a comprehensive privacy program, VIZIO must designate an employee responsible for privacy matters, conduct a comprehensive risk assessment to identify potentially inappropriate uses of consumer information, create a plan to remediate these risks, and then regularly evaluate the plan's effectiveness and update it according to the findings of those assessments. The Order also requires that the privacy program include a vendor-management plan to ensure that any of VIZIO's service providers safeguard information appropriately. The comprehensive privacy program will be the subject of third-party assessments (also required by the Order) which will be conducted by an FTC-approved assessor. The assessments will begin six months after the Order's effective date, and be conducted every two years for the next two decades. Similar requirements have been features of other FTC settlements in previous privacy cases, including the FTC's settlements with Eli Lilly, Ashley Madison, and InMobi.

A 3-0 vote of the FTC's commissioners approved the complaint and proposed Order. However, Acting Chairman Maureen Ohlhausen filed a concurring statement to call attention to the complaint's characterization of "television viewing activity" as "sensitive information" that, when shared without consent, "causes or is likely to cause a 'substantial injury' under Section 5(n) of the FTC Act." Acting Chairman Ohlhausen noted that this is the first time the FTC has "alleged in a complaint that individualized television viewing activity falls within the definition of sensitive information"—a category previously reserved for "financial information, health information, Social Security Numbers, information about children, and precise geolocation information." Although voting to approve the complaint and proposed Order, Acting Chairman Ohlhausen noted that "[t]his case demonstrates the need for the FTC to examine more rigorously what constitutes 'substantial injury' in the context of information about consumers" and indicated that she "will launch an effort to examine this important issue further."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions