Are Smart TVs too Smart for Their own Good?

Smart TVs have made TV viewing a more interactive, engaging experience, but at what price? When anything connects to the Internet, there’s an inherent risk of it being hacked, which can result in a breach of your privacy. Smart TVs fall into this category of hackable technology, and recently TV manufacturer Vizio has felt the sting—along with millions of owners of Vizio TVs.

According to a $2.2 million suit filed by the Federal Trade Commission (FTC), the television manufacturer violated the FTC Act and New Jersey consumer protection laws when it installed software to collect viewing data on 11 million TVs without consumers’ consent, something Electronic House sister publication CE Pro predicted two years ago when Vizio first filed for its IPO.

“In filing for its $172.5 million IPO, low-cost TV maker Vizio (VZIO) discloses why it sells so many TVs at such piddling margins: it’s all about seeding the marketplace with data-collection devices,” wrote CE Pro editor Julie Jacobson at the time. “Vizio isn’t really luring investors with promises of really good TVs. That prospect is buried in its plans to deliver customer data, monitoring tools and e-commerce platforms to advertisers and online resellers.”

According to the FTC, beginning in February 2014 Vizio manufactured its smart TVs to capture second-by-second data about video displayed on the TVs, including consumer cable, broadband, set-top box, DVD, over-the-air broadcasts and streaming devices, through its “Smart Interactivity” feature. Vizio touts the feature as enabling program offers and suggestions but did not inform consumers that the settings also collect consumers’ viewing data.

Vizio also allegedly facilitated “appending specific demographic information to the viewing data, such as sex, age, income, marital status, household size, education level, home ownership, and household value. Vizio sold this information to third parties, who used it for various purposes, including targeting advertising to consumers across devices, according to the complaint,” according to the FTC.

The federal court order will require Vizio to get expressed consent for its data collection practices and delete all information collected before March 1, 2016.

Vizio Issues Statement on Settlement

“VIZIO is pleased to reach this resolution with the FTC and the New Jersey Division of Consumer Affairs. 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,” says Jerry Huang, general counsel, VIZIO.

“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,” Huang continues. “Instead … 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. 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 also notes that even before the resolution was announced, the company had addressed concerns by updating online and onscreen disclosures. The FTC complaint acknowledged that Vizio sent on-screen notifications informing users about viewing data collection, and that it reminds users of the option to turn this feature off or on.

Vizio now offers mechanisms to educate users about the purpose and nature of its viewing data program.

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