The Federal Trade Commission has declared that Vizio has indeed used at least 11 million of its Smart TVs to spy on its users and has now agreed to pay $2.2 million as settlement.

The breakdown of that amount is divided between the FTC and the New Jersey Division of Consumer Affairs, each taking $1.5 million and $1 million, respectively. The latter, however, includes a $300,000 suspended amount.

On Vizio Spying

The issue stemmed after Vizio was found to have installed a software on its smart TVs that spied on its users' viewing habits without their consent. The technology is claimed to be capable of capturing second-by-second information being viewed on the Vizio smart TV screen. What is worse was that the company has sold the collected data to advertisers and who knows who else.

Vizio established this practice through its privacy policy, which was not advertised to consumers. The data collection has been turned on by default through the "Smart Interactivity" feature, which we also have seen used by companies such as LG and Samsung. Vizio customers practically had no choice because no one knew about it.

Aside from the viewing habits, Vizio further attached key classifications to data collected such as gender, age, education, home value, IP address, and household size, among other demographic information. These data are prized by advertisers in the business of targeted advertising.

Litigation

Vizio was dragged to court by the FTC and New Jersey with the allegation that the practice is deceptive and violated several consumer protection statutes including the FTC Act.

With the settlement, the district court in New Jersey has ruled that Vizio will now have to "prominently disclose and obtain affirmative express consent" from the consumers before it could collect and share any data in the future. In addition, it is also obliged to delete all collected information before March 2016.

"So, before a company pulls up a chair next to you and starts taking careful notes on everything you watch (and then shares it with its partners), it should ask if that's O.K. with you," Kevin Moriarty, attorney at FTC's division of privacy and identity protection, said. "Vizio wasn't doing that, and the FTC stepped in."

Vizio has maintained that all its collected data was never attached to any specific name or contact information. The company, through its legal counsel Jerry Huang, stated that it is pleased with the resolution of the case, noting how the affair will contribute to the foundation of best practices standards in terms of data collection in the industry.

Future Prospect

The development involving Vizio's corporate practice has highlighted the direction that the government and its regulatory agencies are taking, which more of a hands-off approach. Vizio's culpability has been determined using the previous administration's close regulatory mechanism. Now, companies are freer to do whatever they please in the interest of deregulation.

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