Vizio revealed Monday that it has settled an investigation by the Federal Trade Commission (FTC) and the New Jersey Division of Consumer Affairs (NJ) into alleged data-mining practices through its smart TVs.
The Irvine, Calif.-based company agreed to pay $2.2 million to settle a lawsuit alleging it collected customers’ TV-watching habits. It also must delete all data gathered through its TVs’ data-mining software before March 1st, 2016.
Further, the action establishes a new best practices procedure consumer electronics manufacturers should employ before gathering viewer-specific data through their products and services. This will include clearly notifying purchasers in advance that the product they purchase will be used to gather viewing data and the manufacturer should obtain the permission of viewers before the data is gathered and used.
The lawsuit alleged that in 2014 Vizio began using software built into more than 11 million smart TVs to gather “highly-specific, second-by-second information about television viewing.”
Vizio then allegedly worked with another company to associate demographic information with each household, so that viewing habits could be paired with information about a viewer’s sex, age, income, marital status and other lifestyle specific details.
Although Vizio admitted to no wrong-doing, the data-mining practices worried some consumer watchdog groups that data would be sold to advertising and marketing agents, who could use it to solicit the sale of products and services and send spam to telephones and email accounts.
Vizio denied that they gathered the names or contact information of its smart TV customers through the data-mining software.
Read more on Vizio’s data-mining settlement after the jump:
In a statement issued by the TV maker Monday, Jerry Huang, Vizio general counsel said: “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. The [automated collection] program never paired viewing data with personally identifiable information such as name or contact information, and the Commission did not allege or contend otherwise. 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.”
“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,” concluded Huang.
Vizio said it had already started to address the FTC’s concerns by updating online and onscreen disclosures.
“For example, the FTC Complaint acknowledged that Vizio has sent onscreen notifications informing users about viewing data collection, reminding users of the option to turn this feature off or on, and educating users about the purpose and nature of its viewing data program,” the company said in a statement. “This resolution concludes all pending government investigations into Vizio’s privacy practices.”
Although the government complaints have been settled, Vizio still faces a class-action lawsuit filed by a number of customers around the country who said they bought a Vizio TVs without knowledge that they were being used to collect private viewing behavior.
However the settlement of the investigation does come at a time when Vizio and China-based LeEco are trying to get government approvals for LeEco to acquire controlling interest in the California-based company, which has been ranked as high as second in market share for some segments of the U.S. TV market.
Both companies had hoped to have the acquisition of shares by LeEco completed by the end of January, but deal has yet to be finalized.
By Greg Tarr
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