Smart-TV marketer Vizio settled what appears to be the first TV data-related case for the Federal Trade Commission on Monday, agreeing to pay $2.2 million over claims by the FTC and the New Jersey attorney general's office that it improperly used information about what its customers were watching.
In an era in which TV viewing data is being gathered and disseminated across the advertising ecosystem with little intervention from regulators, the case suggests that the FTC may require consumer permission to use viewing data in certain ways.
The regulators alleged that Vizio decieved consumers by collecting second-by-second data about what its customers watched on 11 million internet-connected TVs, including on DVDs and streaming devices, and enhancing that data with demographic information such as their age, gender, and income level, all without their knowledge or consent. Gathering the data without informed consent violated the FTC Act and New Jersey's consumer protection laws, according to the joint complaint, which also alleged that Vizio sold the information to third parties for purposes including ad targeting across devices.
The complaint alleged that Vizio caused "substantial injury" to customers by sharing household-level TV data that the FTC considers sensitive.
"In this case is we have alleged that television viewing information is sensitive information that requires companies to get opt-in consent," said Kevin Moriarty an attorney with the FTC's Division of Privacy and Identity Protection who worked on the case. According to this definition, TV viewer data would be akin to other sensitive data such as financial and health information, and thus subject to tighter use restrictions.
Vizio's viewing data program only employed aggregated data and "never paired viewing data with personally identifiable information such as name or contact information, and the Commission did not allege or contend otherwise," noted Jerry Huang, Vizio's general counsel, in a statement.
A concurring statement submitted by Acting FTC Chairman Maureen Ohlhausen affirmed the uniqueness of the categorization of TV data as sensitive:
"We have long defined sensitive information to include financial information, health information, Social Security Numbers, information about children, and precise geolocation information. We have also recommended that companies get opt-in consent before collecting and sharing the content of consumers' communications. But here, for the first time, the FTC has alleged in a complaint that individualized television viewing activity falls within the definition of sensitive information."
Lots of companies providing digital TV services -- such as Tivo, Cox Communications and the collaboration between Dish and DirecTV/AT&T called D2 -- gather granular viewer data and allow advertisers to target audiences using it. TV data compilers such as ComScore's Rentrak and FourthWall Media sell various forms of TV viewer data and services to advertisers, and some suppliers even make device-level TV data available in raw form. Netflix and Amazon among other streaming services make program recommendations based on what people have viewed previously.
It is not clear what the FTC settlement and new labeling of television viewing data as sensitive information might mean for the expanding TV data industry. Whether the companies gathering and selling TV data or advertising targeted based on that data provide suitable informed opt-in consent to customers is also not clear.
While Ms. Ohlhausen said defining TV viewing data as sensitive "may be good policy," she added that the FTC needs to "examine more rigorously what constitutes 'substantial injury' in the context of information about consumers." She will be an examination into the subject in the coming weeks, she said.
Vizio's $2.2 million payment will be split between the FTC, which will receive $1.5 million, and the New Jersey Division of Consumer Affairs, which gets $700,000.
A federal court order requires Vizio to prominently disclose its data collection and sharing practices and obtain express affirmative consent from customers before gathering and using their data. The firm must also delete data collected before March 1, 2016, and implement a data privacy program.