Smart TV manufacturer Vizio unfairly tracked consumers by collecting and sharing information about their viewing history, the Federal Trade Commission said in a complaint unveiled on Monday.
Vizio also deceived consumers by failing to adequately explain its data practices, the FTC alleged.
"Consumers have no reason to expect that defendants engaged in second-by-second tracking of consumer viewing data by surreptitiously decoding content and sending it back to their own servers," the FTC alleged in its complaint.
"Defendants’ collection and sharing of sensitive data without consumers’ consent has caused or is likely to cause substantial injury to consumers that is not outweighed by countervailing benefits to consumers or competition and is not reasonably avoidable by consumers themselves."
From 2014 until last year, Vizio allegedly collected data about the viewing histories of people who purchased smart TVs, and gave that information on an individualized basis to ad tech and analytics companies.
"Defendants provide highly-specific, second-by-second information about television viewing," the complaint alleges. "Each line of a report provides viewing information about a single television."
Vizio, which recently agreed to be acquired for $2 billion by Chinese tech company LeEco, stated Monday that it "never paired viewing data with personally identifiable information such as name or contact information."
Acting FTC Chair Maureen Ohlhausen said Monday that the complaint against Vizio marks the first time the agency has alleged that "individualized television viewing activity" is sensitive information.
"There may be good policy reasons to consider such information sensitive," she said. "But, under our statute, we cannot find a practice unfair based primarily on public policy."
Ohlhausen added that the case "demonstrates the need for the FTC to examine more rigorously what constitutes 'substantial injury' in the context of information about consumers."
She also said that she supports the portion of the complaint that accuses Vizio of deceptively omitting information about its tracking initiatives. "Evidence shows that consumers do not expect televisions to collect and share information about what they watch," she wrote. "Consumers who are aware of such practices may choose a different television or change the television’s settings to reflect their preferences."
The allegations against Vizio first surfaced in November of 2015, when ProPublica reported that the company tracks TV viewers by default, and then shares data with companies that send targeted ads to people's phones, tablets and other devices. Shortly afterwards, the company was hit with a class-action lawsuit for allegedly violating the Video Privacy Protection Act, which prohibits video providers from disclosing "personally identifiable information" about people's video-viewing history. That matter is pending in front of U.S. District Court Judge Josephine Staton in Santa Ana, California.