What does your TV-watching history say about you? According to a
recent lawsuit against VIZIO, Inc., it might be more than you
think! One of the world's largest sellers of "smart"
televisions has recently paid a $2.2 million settlement
following charges by the Federal Trade Commission and the Office of
the New Jersey Attorney General that it was unlawfully tracking and
selling 11 million consumers' viewing data. The resulting court
order has important repercussions for both consumers and smart TV
Beginning in February 2014, VIZIO, Inc. began manufacturing
smart TVs (televisions with Internet connectivity). The company
soon after launched a software update installing "Smart
Interactivity," an automated content recognition feature that
could conveniently make program recommendations based on your
viewing history. This meant that VIZIO could collect detailed
information about consumers' TV-watching habits on a
second-by-second basis. Such viewing data was then coupled with the
IP addresses of other Internet-enabled devices in a houseful to
analyze consumer behavior – if an ad online led you to watch
a show on TV, or if a commercial spurred you to check out a
website, that activity was recorded. VIZIO further supplemented
this information with demographic data about its users, including
sex, age, income, marital status, household size, education level,
home ownership, and household value. All of this information was
ultimately sold to advertisers, who used it to conduct targeted
advertising across devices.
According to the complaint, VIZIO failed to adequately inform
its consumers that it would be tracking their viewing history and
offering it to third parties. The software update enabling Smart
Interactivity was preceded by a brief notification that the
software was being installed and could be disabled in the settings;
it did not explain up-front which data was being collected or with
whom it would be shared. The complaint alleges that as a result of
VIZIO's unfair and deceptive behavior, this data tracking was
occurring without user consent, violating Section 5 of the FTC Act
as well as New Jersey consumer protection statutes.
In addition to a $1.5 million settlement payment to the FTC and
$1 million to the New Jersey Division of Consumer Affairs, VIZIO was ordered to delete all the data it
has collected thus far via Smart Interactivity and update its
online and onscreen disclosures to accurately reflect its
While the outcome of this case seems to address the legal
problems with VIZIO's actions, the reasoning behind it may be
subject to reconsideration. In a concurring statement, Acting FTC Chairman
Maureen Ohlhausen examines Count I of the initial complaint, which
alleged that the "granular" TV viewing data collected by
VIZIO was "sensitive information", and that sharing this
data without consent can cause "substantial injury" as
defined by the FTC Act. Olhausen questions whether viewing data,
and the potential harm associated with sharing it, should in fact
be placed in the same category as other pieces of information the
FTC defines as sensitive –"financial information, health
information, Social Security Numbers, information about children,
and precise geolocation information." She cautions against
conflating privacy rights with consumer protection against unfair
practices, and wants the FTC to more precisely determine what
constitutes "substantial injury" when it comes to
Looking forward: same problems, new
While VIZIO's actions and resulting lawsuit are alarming,
they are not surprising. Americans are being increasingly desensitized to the widespread
collection of personal data, be it from their Internet browsers,
phone apps, social media profiles, or voice-activated home systems. While
VIZIO's collecting and combining data provide a strikingly
comprehensive overview of the lives of its individual consumers,
what got the company into legal trouble was the lack of effective
notice before doing so. Other TV-makers have recently faced similar
charges; in 2015, Samsung landed in hot water when it
was revealed that its smart TVs' voice recognition system was
capturing private home conversations and sharing the audio data
with third parties. These cases raise critical questions about the
trade-offs between the rapidly evolving capacity of technology,
market competition, and the value of information about our personal
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
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