Vizio Settlement Calls for on-Screen Disclosures Missing From FTC Consent Decree
Vizio would need to add on-screen privacy disclosures and menu options beyond refinements the FTC ordered the company to make under a February 2017 consent decree, according to the proposed $17 million class-action settlement agreement (in Pacer). It was filed Thursday in court to end numerous complaints the “smart interactivity” function on Vizio smart sets violated the Video Privacy Protection Act (see 1604060039).
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Consumers brought roughly two dozen complaints against Vizio between November 2015 and April 2016, leveraging an SEC registration statement detailing how it planned to sell advertisers the viewership data it collected through the tracking capability on its smart sets. The cases were later consolidated in U.S. District Court in Santa Ana, California, where plaintiffs filed an “unopposed” motion (in Pacer) Thursday asking Judge Josephine Staton to convene a Dec. 7 hearing to ratify the settlement.
Vizio admits it “enabled detection” of content displayed on smart TVs “and information unique to the unit including IP address," but it "never connected such information to an individual’s name, address or similar identifying information,” said a statement. “Viewing data helps guide advertisers and programmers to develop content that is more geared towards consumers’ preferences and interests -- a fact that plaintiffs in the class action proceeding have acknowledged.”
Under Vizio’s 2017 agreement with the FTC to pay $2.2 million to settle allegations it fashioned smart TVs to spy on viewing habits (see 1702060042), the company “worked closely” with the commission “to establish clear guidelines for obtaining explicit consumer consent,” it said. The manufacturer “adopted clear, prominent and explicit viewing data disclosures that are now widely considered the most consumer-friendly disclosures in the television industry,” it said. It urges other smart TV brands “to move towards adopting these transparent, industry-leading practices,” it said. The agreement estimates the potential class to number 16 million U.S. households that bought Vizio smart TVs in the three years ended Feb. 7, 2017, when the consent decree was finalized.
The plaintiffs’ motion acknowledged that Vizio’s “imposition of prominent and clear disclosures” and its “shift to an affirmative consent model” under the FTC consent decree was "a significant change which resolves a central concern that motivated this lawsuit.” Those weren't enough, said the motion, so plaintiffs negotiated “further changes to the on-screen disclosure for new customers.” Plaintiffs additionally “secured an agreement that Vizio will disclose viewing data collection” on the “quick-start” leaflet guide packaged with the TV, increasing “the chances that customers will pause and think about what choice is best for them,” it said.
The on-screen disclosure changes will be “two-fold,” said the motion. A “Decline” button will
now appear next to an “Accept” button, replacing a “Settings” button, signaling a “different process for declining data collection,” it said. Another on-screen disclosure will “explicitly” state that declining the TV’s viewing data collection capability “will not change the functionality of your device,” as can happen on the smart TVs of other brands, it said. The language “effectively informs” Vizio smart TV owners that “there have not been adverse consequences in terms of functionality if viewing data collection is declined,” it said.
Under its consent decree, Vizio was “obligated to destroy viewing data” it collected before March 2016, “unless a user of the television subsequently affirmatively consented to viewing data collection when presented with the revised notices,” said the motion. Under the new settlement, Vizio will extend the “deletion period to correspond with the class period” -- three years through Feb. 7, 2017 -- “and will destroy all viewing data collected during the class period without exception,” it said. A unnamed third party “will verify that the viewing data has been successfully destroyed,” it said. The court “retains continuing jurisdiction to address any issues with the enforcement of the settlement agreement,” it said.
The company will beam notices of the settlement at least twice “directly” to about 6 million of its smart TVs, said the motion. The settlement administrator will email a “substantially similar” notice to 9 million additional Vizio owners, it said. It estimates each consumer who files a claim will be entitled to average “compensation” of $13-$31. A “digital media campaign” will “supplement” the TV and email notices, including ad placements on Facebook and Google, it said: "A minimum of 62 million impressions will be delivered."