On February 6, 2017, Vizio Inc., a manufacturer and seller of internet-connected “smart” televisions, agreed to pay $2.2 million to settle allegations by the Federal Trade Commission (“FTC”) and the Office of the New Jersey Attorney General that Vizio installed software on its TVs to collect and sell data detailing the viewing habits of 11 million consumers without their knowledge or consent.  The settlement requires that going forward Vizio obtain affirmative consent from consumers for its data collection and sharing practices and implement a comprehensive data privacy program. 

According to the FTC’s and New Jersey Attorney General’s complaint, Vizio developed and installed on its TVs automated content recognition (“ACR”) software, which it used to collect from its TVs information about what a consumer was watching on a second-by-second basis.  Vizio appended specific demographic information to the viewing data, such as sex, age, income, marital status, household size, education level, home ownership, and household value.  Vizio then sold this information to third parties, who used the information for various purposes, including targeting advertising to consumers across devices.  According to Vizio, the ACR program never paired viewing data with personally identifiable information of the consumers, such as name or contact information.

According to the complaint, this practice constituted an unfair and deceptive act or practice under the Federal Trade Commission Act and an unconscionable commercial practice under the New Jersey Consumer Fraud Act because Vizio touted its “Smart Interactivity” feature that “enables program offers and suggestions,” but failed to inform consumers that the settings also enabled the collection of consumers’ viewing data.

Under the settlement, Vizio will pay $1.5 million to the FTC and $1 million to the New Jersey Division of Consumer Affairs, with $300,000 of the amount going to New Jersey suspended and eligible to be vacated after five years if Vizio complies with certain provisions of the agreement.  Those provisions include the requirements that Vizio (1) prominently disclose and obtain affirmative express consent for its data collection and sharing practices, (2) delete all data collected prior to March 1, 2016, (3) implement a comprehensive data privacy program, (4) regularly report on the progress of that program, and (5) permit the FTC or New Jersey Attorney General to monitor Vizio’s compliance by interviewing anyone affiliated with Vizio or even posing as a consumer or other supplier to ensure Vizio’s compliance.  According to Vizio, 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.”