WASHINGTON • The Federal Trade Commission (FTC) said on Monday that Vizio used 11 million televisions to spy on its customers.
The Irvine, California-based television maker, which was recently purchased by Chinese firm LeEco, agreed to pay US$2.2 million (S$3.1 million) to settle a case with the commission and the New Jersey attorney general's office after the agencies accused it of secretly collecting - and selling - data about its customers' locations, demographics and viewing habits.
With the advent of "smart" appliances, customers and consumer advocates have raised concerns about whether the devices could be sending sensitive information back to their manufacturers.
The commission says the Vizio case shows how a television or other appliance might be telling companies more than their owners are willing to share. "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 okay with you," Mr Kevin McCarthy, an attorney with the commission's Division of Privacy and Identity Protection, wrote in a blog post. "Vizio wasn't doing that and the FTC stepped in."
As part of the settlement, Vizio neither confirmed nor denied wrongdoing. "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 is now leading the way," Vizio's general counsel, Mr Jerry Huang, said of the settlement.
Although some consumers might not recognise the name Vizio, most have probably watched something on a Vizio TV. The firm is the most popular TV maker in the United States. With a 20 per cent share of the US market, it made about one in five TVs sold in the US last year.
LeEco, which bought Vizio for US$2 billion last year, has broad ambitions in the consumer space, with businesses that also produce a Netflix-style media service, smartphones and cars.
According to the lawsuit, Vizio was literally watching its watchers - capturing "second-by-second information" about what people viewed on its smart TVs. That included data from cable, broadband, set-top boxes, over-the-air broadcasts, DVDs and streaming devices.
Vizio is also accused of linking demographic information to the data and selling the data - including users' sex, age and income - to companies that do targeted advertising.
It said in its statement that it never paired viewing information with data that identified individual users, but used viewing data only in "the 'aggregate' to create summary reports measuring viewing audiences or behaviours".
The US District Court for the District of New Jersey ordered Vizio to pay US$1.5 million to the commission and US$1 million to the New Jersey attorney general's office. Vizio will not have to pay US$300,000 of that unless it violates the order in the future.
The part of the settlement paid to the commission reflects the amount Vizio probably made from collecting and selling the customer information. Vizio will delete all the data it collected through the feature before March last year. It must also prominently display its data collection and privacy policies to consumers and create a programme to make sure its partners follow those policies.