If your company collects information regarding consumers though Internet-connected devices, you will want to take note of the Federal Trade Commission’s (FTC) recent privacy-related settlement (brought in conjunction with the New Jersey Attorney General) with smart TV manufacturer Vizio, Inc. The settlement is significant for four reasons:
- The FTC reinforces the position it has taken in other actions that the collection and use of information in a way that would surprise the consumer requires just-in-time notice and choice in order to avoid a charge of deception and/or unfairness under Section 5 of the FTC Act.
- The FTC takes the position that television viewing activity constitutes sensitive data. This marks a departure from its approach of limiting sensitive data to information that, for example, can facilitate identity theft, precisely locate an individual, is collected online from young children or relates to matters generally considered delicate (such as health information).
- The settlement includes a payment of $1.5 million to the FTC (as well as payment of civil penalties to New Jersey), but the legal basis for the FTC payment is not stated. This could suggest that the FTC will more aggressively seek to obtain injunctive monetary relief in Section 5 cases.
- Acting Chairwoman Maureen Ohlhausen explicitly noted in a concurring statement her skepticism regarding both the allegation that TV viewing data is “sensitive” and that the FTC’s complaint adequately established that the practices at issue constitute “substantial injury” under the unfairness prong of Section 5.
Leaving aside what the chairwoman’s concurrence may portend for future enforcement efforts, the FTC again seems to be using allegedly bad facts about privacy practices to push the envelope of its authority. Accordingly, with the Internet of Things boom fueling a dramatic increase in the number of Internet-connected devices, companies that either collect information via such devices or make use of such collected information should consider the implications of this enforcement action.