Television viewing data is sensitive. And because consumers don’t expect such data to be collected, smart-TV manufacturer Vizio was penalized for doing so without an opt-in.
Vizio paid the Federal Trade Commission (FTC) $2.2 million to settle charges over its data collection practices on Monday. The settlement requires that Vizio delete its old data and get an affirmative opt-in for future data collection.
“In our complaint, we have alleged that TV viewing information is sensitive data that requires an opt-in for collection and sharing, much like other categories of sensitive information including health and financial information, children’s information and precise geolocation,” FTC attorney Kevin Moriarty told AdExchanger.
Although FTC settlements only apply to the company being disciplined, in this case Vizio, the ruling is likely to be interpreted by other TV manufacturers dabbling in data collection that TV viewing data requires an opt-in.
“This settlement … makes clear that smart-TV makers should get people’s consent before collecting and sharing television viewing information,” Moriarty added in a blog post about the settlement.
Other TV manufacturers may already comply. When ProPublica broke the news about Vizio’s data collection in November 2015, it mentioned that Samsung and LG Electronics only collected data after receiving an opt-in.
What got Vizio in trouble was not only the type of data it collected, but that it did so in an “unfair and deceptive” way – practices the FTC watches over closely.
When users activated Vizio’s “Smart Interactivity” feature that collected their data, they were promised offers and suggestions, but not told how data would be collected and why. That created what the FTC characterized as a misleading opt-in.
Plus, the data collected from consumers was ruled too sensitive.
Vizio used automated content recognition to track what programs and ads a consumer watched across cable, broadband, set-top boxes, DVDs, streaming devices and on-air broadcasts. And Vizio appended that data to include sex, age, income, marital status, household size, education level, home ownership and household value, according to an FTC release.
The company then sold that data. Multiple class-action lawsuits name WPP Group, Interpublic Group, Tapad, Xaxis, TubeMogul and Visible World as companies receiving that data. Those lawsuits, which will proceed separately from the FTC settlement, hinge on an interpretation of the Video Privacy Protection Act, a law that prevented video rental companies from selling data about movie rental history.
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The timing of the settlement means the investigation began under outgoing FTC Chairwoman Edith Ramirez. But the incoming chairwoman, Maureen K. Ohlhausen, voted in favor of the settlement. Her statement about the Vizio settlement, though, suggests that she may use a different set of criteria for future cases.
“There may be good policy reasons to consider such information [individualized television viewing activity] sensitive,” Ohlhausen said. “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,” she continued, saying that she would launch an effort in the coming weeks to examine this issue further.
On the business side, this settlement ironically may pave the way for the advanced TV space to develop, according to a source who partners with Vizio around its data. The source didn’t want to be named because it could violate a nondisclosure agreement.
“I don’t expect this to massively affect Vizio’s ability to collect TV data long-term,” the source said. “With this behind us now, we expect a lot more growth in the business together.”
Update: Vizio sent a statement in response to the settlement to AdExchanger. Vizio said that it never matched viewing data with any personally identifiable information (PII). Vizio also said that it updated its disclosures prior to the settlement.
And the smart TV manufacturer confirmed that opt-in will be the norm for TV data collection. “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,” Vizio General Counsel Jerry Huang said.
