Vizio agreed to pay $2.2 million to settle charges that its software collected television owners’ viewing data without their consent or knowledge.

This week, Vizio, one of the biggest makers of internet-connected televisions, agreed to pay $2.2 million to settle charges that it has been collecting and selling viewing data from millions of TVs without the knowledge or consent of the sets’ owners. The charges, brought by the Federal Trade Commission and the New Jersey attorney general’s office, have some serious implications for consumers and smart TV makers.

Here’s what you should know.

What data did Vizio collect?

Vizio, which has sold more than 11 million internet-connected TVs since 2010, and its data arm earns money by licensing people’s TV viewing information in three main ways, according to a complaint from the agencies.

One is through audience measurement — showing what programs and commercials people watched, along with how and when they viewed it. Another is from gauging the effectiveness of advertisements, including the ability to “analyze a household’s behavior across devices,” using the IP address attached to all the internet-enabled gadgets in a home. That could mean tracking whether someone visited a website on their laptop after seeing a fast food commercial, or if an online ad motivated them to watch a TV show. The third is by targeting ads to people on other devices, like phones or tablets, based on what they watched on TV.

How did Vizio’s software work?

The complaint says that Vizio has manufactured TVs since at least February 2014 with software turned on by default that collects “information about what a consumer is watching on a second-by-second basis.” It also was said to have remotely installed the software, a proprietary form of automated content recognition, or ACR, software, onto TVs sold without it. Data about pixels on the screen are sent to Vizio servers and matched to a database of TV shows, movies and commercials. Vizio called the tracking “Smart Interactivity,” as ProPublica reported in November 2015, and portrayed it as a feature for program suggestions.

When TVs were updated with the software, people were notified through a brief pop-up, above, saying “Smart Interactivity has been enabled on your TV,” without disclosure on the data collection. In March 2016, once the F.T.C. and the New Jersey attorney general’s ’s office investigations were pending, the complaint said that a new pop-up appeared that referred to the data collection for the first time.

Who was buying the information?

Vizio did not provide names but says online it may share viewing data with “authorized data partners including analytics companies, media companies and advertisers.” Vizio is the second-biggest smart TV brand in North America, after Samsung and before LG, according to IHS Markit data.

People expressed their frustration on Vizio’s Facebook page on Tuesday, with one person writing, “We should stop calling these devices ‘smart’ and call them what they really are — spies.”

Just how specific was this data?

Viewing information was never paired with “personally identifiable information such as name or contact information,” Jerry Huang, Vizio’s general counsel, said in a statement. But the agencies’ complaint noted that Vizio provided IP addresses to data aggregators that would remove a person’s name, but still match the TV viewing habits to other personal information like “sex, age, income, marital status, household size, education, homeownership and household value.”

Vizio, which filed for an initial public offering in 2015 that did not happen, said at that time, it collected “up to 100 billion anonymized viewing data points each day” from its TVs.

How can you opt out on your TV?

Vizio has information about how it uses “Smart Interactivity” and “Video ACR” on its website and how to opt out. It instructs users to press the “Menu” button on their remote or open their HDTV Settings app, navigate to “system,” then select “Reset & Admin.” After highlighting “Smart Interactivity,” they can press the “Right” arrow and change the setting to “Off.”

Vizio had to only pay a fine?

The company, based on a stipulated order, must delete data collected before March 1, 2016 — before it sent the pop-up on data collection — and “prominently disclose and obtain affirmative express consent for its data collection and sharing practices.”

In an email responding to questions from The New York Times, Vizio said that it had a new, prominent opt-in notice sharing information about the collection of its viewing data, and that “only users which ‘accept’ ACR data collection will be enrolled in ACR data collection.”

It’s also worth noting that this order is separate from a class-action lawsuit Vizio is fighting in California around the tracking software in its TVs. The company said in its email it planned to “vigorously defend the class-action proceedings, and believe them to be without merit.”

Did Vizio make money doing this?

In Vizio’s filing to go public, it said it had “yet to generate meaningful revenue from” Inscape, its data arm. It noted, however, that demand from advertisers and media content providers could give it access to “total global market spend on audience and advertisement measurement services” of about $1.9 billion in 2014. Vizio agreed to be acquired by the Chinese video streaming company LeEco last year, but a spokeswoman said Tuesday that it was “pending and has not been completed yet.”

How about other smart TVs?

While this complaint is about Vizio, the F.T.C. said in a statement that “we always advise companies to review our settlements for a better understanding of what the F.T.C. Act requires.”

This is also the first time that the F.T.C. has alleged in a complaint that individualized TV viewing activity counts as “sensitive information,” a category that includes Social Security numbers, information about children and precise geolocation information. The F.T.C. has recommended that consumers be given the choice to opt into sharing sensitive data.

Chris Heinonen, a staff writer at The Wirecutter, a product review site owned by The New York Times, said Vizio, while it is under fire, was now being more transparent than competitors engaging in the same data collection, as well as streaming services like Netflix.
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