February 23, 2017
Big Brother’s Got Siblings: VIZIO’s $2.2 Million Settlement with the FTC
In the modern world, there’s enough covert and overt surveillance occurring with enough regularity to make George Orwell’s predictions seem demure. From the Snowden-triggered revelations of 2013 to the endless cookies users accept while browsing the web, computer and smart phone users are leaving footprints everywhere they wander. Governments and corporations follow close behind, collecting and saving this information, often indefinitely.
In the consumer world, most of this data collection is authorized pursuant to agreements in which users affirmatively “opt-in” to programs which report data on user’s usage habits, or through shrink wrap or clickwrap agreements at the outset of product usage. Smart TVs produced by VIZIO, however, do not follow this trend. Starting in February of 2014, VIZIO’s Smart TVs included software which tracked and transmitted back to itself information about individual consumer viewing. Both newly manufactured televisions, and older models were included—VIZIO simply installed the tracking software on older televisions by way of a “software update.” This software recorded up to “100 billion data points each day” on 10 million VIZIO televisions—that’s 10,000 per television for those following along at home—without user’s consent or knowledge. From there, VIZIO sold the information it collected, which included not only viewing history, but the IP address of the device used, MAC addresses, and WiFi information, to third parties.
Access to IP information allowed these third parties to “gather personal details like sex, age, income, marital status, household size, education, and home ownership.” In the initial filing paperwork for its 2015 IPO, VIZIO itself described the program as “provid[ing] highly specific viewing behavior data on a massive scale with great accuracy.”
This activity eventually attracted the attention of the Federal Trade Commission, which filed a Complaint on February 6, 2017, alleging that VIZIO violated the Federal Trade Commission Act and New Jersey consumer protection laws. VIZIO expeditiously settled the following day, agreeing to pay $1.5 million to the FTC and $1 million to the New Jersey Division or Consumer Affairs. VIZIO will also be required to purge illegally collected data and put in place data privacy safeguards.
The story of VIZIO’s subversive data collection raises many questions for the privacy-conscious consumer.
Naturally, one must wonder whether or not similar programs are run across any of the numerous internet-connected devices we keep in our homes today—especially when a practice such as VIZIO’s, audacious in its out-in-the-open presence, managed to exist for almost three years before formal repercussions manifested themselves.
Smart TVs, which represent only a fraction of these devices, are in 29% of households in which income is $75,000 a year or greater, and growth in their usage is expected to continue to grow in the coming years. Indeed, many likely are, agreed-to by the consumer’s hasty scroll past the initial clickwrap agreement upon beginning use of a new device or program.
As use of “smart” devices continues to climb, and the internet of things grows, current privacy protections may need to be rethought in favor of a more stringent—and enforceable—set of rules. If more demanding privacy laws are not promulgated, it is likely the concept of privacy in the digital age will continue to dissolve.