Vizio’s FTC Data Verdict Is a Well-Worn Lesson

A little over a month ago, Vizio settled for $2.2 million with the FTC after an investigation into its data collection practices. In the settlement, the TV-maker agreed to collect future data only when users opt in. However, Vizio is still facing a class action lawsuit based on VPPA (Video Privacy Protection Act).

The dispute is over Vizio’s ”Smart Interactivity” feature in its smart TVs, which enables content suggestions and offers for users. Vizio had collected data around users’ viewing habits and matched it to users’ demographic data (age, sex, income, marital status, education level and so on) without getting explicit user consent—then turned around and sold that data to data platforms, ad tech providers and agencies.

According to a recent AdExchanger article, Vizio’s been catching heat not just from the feds, but from its business partners. Some vendors and agencies that have reportedly “temporarily cut ties with” the smart TV provider, and one tech CEO said his company has been approached by partners warily asking whether they used Vizio data. The article concludes that Vizio can still bounce back, even though its data business will be subject to greater scrutiny and may not be as broad as it had been.

When you look at the business of digital video, the Vizio case really doesn’t set a precedent. Long-form video providers have already been hauled out on the carpet for similar violations. Netflix was sued for linking its former customers to their rental histories after cancelling membership. (Netflix lost that case.) Hulu was sued for linking users’ Facebook IDs to their viewing history. (Hulu won, but the case is being appealed.) With Vizio implicated, it’s clear that… OTTs are not immune? It’s kind of hard to tell what the lesson learned might be this time. The lesson—don’t match viewing histories to anything that might identify a specific user, unless that user gives explicit consent by opting in—has already been taught in other recent instances.

At this point, another VPPA-related lawsuit isn’t going to make an example of anyone. It’s also hard to say that the FTC is using the law in this sense to compromise the ability of companies in digital to do business. Collecting user data and sharing it with partners is legal in itself—the digital ad model isn’t particularly threatened. The illegal part is failing to inform users of what data was being collected, who was going to use it and how, and then giving the user the opportunity to say they were willing or unwilling to have their data shared this way.

Over here at AdMonsters, we’ve been posting a bit lately about how ops can be an asset in keeping publishers out of legal hot water. Ops teams should be proactive in working with legal teams, and should be able to flag issues that go beyond the publisher’s minimum business requirements and might create a legal conundrum. Ops can recognize the difference between targeting at the audience level and targeting a specific user. And ops needs to assure there’s a consistent partner screening process, while documenting which third parties are on the site and what their code is doing. We researched these guidelines and suggestions by talking to ops people at publishers that distribute video content on a wide-scale, international level—suggesting that while compliance with the FTC can sometimes be complicated, it’s possible and it’s not a threat to a video-heavy publisher’s business.

Of course, if the process of sharing sensitive data about your users, obtained without their consent, with your partners is baked into your business model, you’re going to lose some business if you suddenly need to assure user consent. Transparency is better for everyone in the industry, and it encourages users to consent. But 100% user consent for data collection and sharing is not likely. A publisher or platform’s business needs to be built to run on a smaller, more reasonable percent of fully on-the-level data.

This article has been updated to correct an earlier version, which conflated Vizio's February FTC case with its ongoing class action lawsuit.

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Brian LaRue has been AdMonsters' Staff Writer since the summer of 2015. He arrived at AdMonsters with several years' worth of knowledge of media and advertising tech, having written and edited on behalf of publications and tech vendors alike. Brian has been publishing steadily since high school and cut his teeth professionally at regional alt-weeklies in New England. Being involved in print in the 21st century certainly helped inspire his vocal advocacy of digital media. These days, he lives in Brooklyn, NY, where he pursues several threads of an art-damaged semi-secret life.

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