Vizio to pay millions in FTC settlement for spying on customers

TV manufacturer Vizio and a subsidiary will pay $2.2 million to settle claims that the two companies secretly tracked consumers' viewing habits and sold the information to marketing companies, according to New Jersey officials.

Dan Steinberg/AP for LeEco
Vizio CTO Matthew McRae at LeEco and VIZIO Press Conference in Hollywood in July 2016, where it was announced that LeEco had acquired VIZIO for $2 billion.

The Federal Trade Commission (FTC) said Monday that television manufacturer Vizio is paying a total of $2.2 million to settle allegations that the company tracked consumers’ viewing habits and sold the information to advertisers and data brokers.

The Irvine, Calif.-based company, which has sold over 11 million internet-connected televisions since 2010, is required to delete all the information collected prior to March 1, 2016, in addition to obtaining consent from users in its future data collection and sharing practices.

“This settlement stops Vizio’s unauthorized tracking, and makes clear that smart TV makers should get people’s consent before collecting and sharing television viewing information,” Kevin Moriarty, an attorney for the FTC, wrote in a blog post on Monday.

The announcement of the settlement came on the same day that the FTC and the State of New Jersey filed a federal court order against Vizio. According to the complaint, Vizio and its subsidiary have allegedly been continuously collecting data on what a consumers are watching “second-by-second,” without any onscreen notice, since February 2014.  

“Defendants have stated that the ACR software captures up to 100 billion data points each day from more than 10 million Vizio televisions,” the complaint states. “Defendants store this data indefinitely.”

Vizio then sold the information to third parties for revenue. According to the plaintiffs, the users’ viewing data was used for three main purposes: analyzing the users' viewing habits, measuring the effectiveness of advertising campaigns, and pursuing targeted advertisement on the company's other digital devices.

In addition, the parallel investigations conducted by FTC and the state found that the company also shared the viewers’ demographic information, including sex, age, income, and household size. However, Vizio denied such allegations in its statement.

“The ACR program never paired viewing data with personally identifiable information such as name or contact information, and the Commission did not allege or contend otherwise,” Jerry Huang, general counsel of Vizio, said in a statement. “Instead, as the Complaint notes, the practices challenged by the government related only to the use of viewing data in the ‘aggregate’ to create summary reports measuring viewing audiences or behaviors.”

The case against Vizio was not without precedent. As The Christian Science Monitor noted in 2015:

LG came under fire in 2013 for the way it used customer data, which led to an investigation by the United Kingdom’s information commissioner’s office over whether the company was mining data without proper consent. Blogger Jason Huntly revealed LG’s smart TV was collecting consumer information including viewing history and files stored on USB drives attached to the television, even when the “Collection of watching info” setting was turned to ‘off.’”

Going forward, Vizio has said it hopes this resolution will offer some guidelines for data collecting and sharing practices in the industry.

“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,” Mr. Huang said.

This report includes material from the Associated Press.

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