Smart Television Manufacturer Settles by Paying $ 2.2 Million to the FTC and the State of New Jersey

by Alston & Bird
Contact

The FTC and the State of New Jersey recently announced a settlement with Vizio, Inc., in the amount of $2.2 million for tracking consumer behavior using its smart television devices.

The complaint alleged that Vizio acted unfairly by collecting, storing (indefinitely) and sharing consumer data with third parties without consent and in an unexpected manner. Further, the complaint alleged that Vizio had misrepresented the functionality of the feature in their smart televisions that collected such data (also known as “Smart Interactivity”). It was also alleged that these practices were an unconscionable commercial practice in violation of the New Jersey Consumer Fraud Act (N.J. Stat. Ann. § 56:8-2).

To elaborate further, the “Smart Interactivity” feature contained automated content recognition software. In other words, the software would continuously collect a selection of pixels on a consumer’s screen and match them against a database to identify the content being watched. The televisions were also uniquely identifiable with a persistent identifier. Through these uniquely identified televisions, Vizio also collected and shared other data elements like IP addresses, MAC addresses, WiFi signal strength and access points. In addition, the company supplemented such viewing data with demographic information such as sex, age, marital status, household size, education level, home ownership, and household value. Consumers were not informed that the television was collecting such data or that Vizio was sharing this data with third parties.

The stipulated federal court order required Vizio to refrain from making misleading representations with respect to the extent to which Vizio collects, uses, maintains, or protects the privacy, confidentiality, or security of personal information and the purposes of such collection or use. The order requires Vizio to obtain affirmative express consent before collecting “Viewing Data” (data about the content viewed on television, or any reports or data derived from it and any information combined with such data) going forward. Before collecting such data, Vizio is required to:

  1. Prominently disclose (separate and apart from any “privacy policy,” “terms of use” page, or other similar document)
    i. the types of Viewing Data that will be collected and used;
    ii. the types of Viewing Data that will be shared with third parties;
    iii. the identity or specific categories of such third parties; and
    iv. all purposes for Vizio’s sharing of such information;
  2. Obtain the consumer’s affirmative express consent when disclosure above is made and upon any material changes to the terms disclosed then.
  3. At any time when affirmative express consent is sought, provide instructions on how to revoke consent.

The order defines “prominent disclosure” as requiring, inter alia:

  1. An audible disclosure, including by telephone or streaming video, must be delivered in a volume, speed, and cadence sufficient for ordinary consumers to easily hear and understand it.
  2. In any communication using an interactive electronic medium, the disclosure must be unavoidable (for context, the complaint referred to how Vizio’s disclosures would disappear within a minute or lesser and required no further interaction from the viewer).
  3. The disclosure must use diction and syntax understandable to ordinary consumers and must appear in each language in which the triggering representation appears.
  4. The disclosure must comply with these requirements in each medium through which it is received, including all electronic devices and face-to-face communications.

The order requires Vizio to destroy existing Viewing Data; introduce a mandated privacy program; obtain initial and biennial assessments of compliance with the order; submit compliance reports; and maintain records for twenty years after the order. The order also permits the FTC and the New Jersey State AG to monitor the company.

The Acting Chair of the FTC, Maureen K. Ohlhausen, in her concurring statement, highlighted how the FTC had alleged in the complaint that granular household or individual television viewing activity is sensitive information. This appears to be the first time that the FTC has expressly included such data within the definition of “sensitive information”. Chairwoman Ohlhausen further noted that a finding of unfairness requires the FTC to 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. To that end, she observed that the FTC needed to examine what constitutes “substantial injury” in the context of information about consumers. She indicated that she intends to launch an effort to examine this further. Such a study could also potentially inform the larger debate on standing in privacy law suits and should be of particular note to companies marketing now-ubiquitous smart devices.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Alston & Bird | Attorney Advertising

Written by:

Alston & Bird
Contact
more
less

Alston & Bird on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.