How to Protect a Smart TV Manufacturer From the Federal Trade Commission Consumer Privacy Regulations

TechLawLogy™: eDiscovery and Privacy Blog

Tim Chalumeau
Thursday, 11 May 2017

Smart TV manufacturer, Vizio, paid the Federal Trade Commission (“FTC”) $2.2 million after allegations Vizio secretly gathered users’ viewing data and shared it with third parties. Under the FTC and New Jersey attorney general probes Vizio allegedly collected viewing data on 11 million customers and sold this information to third-parties. Vizio allegedly provided this information to these third-parties during the course of two years. The FTC alleged Vizio’s actions have made consumers’ sensitive information (financial information, health data, and Social Security numbers) vulnerable without the consumers’ consent.

The FTC’s Dilemma in Regulating Smart TV Manufacturers

The FTC is attempting to make the regulation of smart TV makers, a standard practice, after the Vizio probe. But even with these efforts, the FTC must still overcome the challenges in regulating smart TV makers. One difficulty in regulating is proving whether there is a substantial injury. Arguing that a consumers’ sensitive information is accessible to a smart TV maker and third parties is an insufficient argument to raise in proving substantial injury. FTC chair, Maureen Ohlhausen states, “there may be good [public] policy reasons . . . [b]ut, under our statute, we cannot find a practice unfair based primarily on public policy.” The FTC’s burden involves, determining how a practice causes substantial injury that is not reasonably avoidable by the consumer and is not outweighed by benefits to the competition or consumers.

Smart TV manufacturers must protect themselves from FTC regulation. Vizio is not the only Smart TV manufacturer that can undergo scrutiny. The FTC must overcome the burden requiring the FTC to find that a manufacturer is deceptively obtaining sensitive information to use for their financial gain. Due to this burden, the FTC now emphasizes requiring smart TV makers to obtain consumer consent before data collection and sharing this information.

Addressing Smart TV Manufacturers’ Concerns over FTC Regulation

The FTC’s investigative probes of Vizio, should put smart TV manufacturers on notice. In response to the probe, Vizio’s attempts to address the FTC’s regulation involved:

  • Sending onscreen notifications to users informing them about viewing data collection; and
  • Reminding users of the option to turn this feature off.

Ultimately, a smart TV manufacturer may have to overhaul their data privacy programs, prominently disclose their data collection practices and obtain affirmative express consent for those practices, without ever committing a substantial injury to a consumer. Along with implementing these restrictions, smart TV manufacturers can be levied with a fine in the millions of dollars. Following the Vizio probe, smart TV manufacturers must be aware of FTC regulation to avoid a fine.

If you are smart TV manufacturer concerned with FTC regulation, please Contact Us.

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