• by Wendy Davis  @wendyndavis, October 4, 2018

Smart TV manufacturer Vizio has agreed to pay $17 million to settle a privacy lawsuit, according to court papers filed Thursday.

If accepted by U.S. District Court Judge Josephine Staton in Santa Ana, California, the agreement will resolve a class-action lawsuit alleging that Vizio violated privacy laws by sharing information about consumers with ad-tech companies and data brokers.

The deal allows 16 million Vizio owners to submit claims, while allowing the lawyers who brought the case to receive up to $5.6 million. If all eligible consumers submit claims, each would receive 62 cents, according to the court papers. The agreement also requires Vizio to display onscreen notices about data collection and allow consumers to either accept or reject sharing data with Vizio.

The legal battle dates to 2015, when a group of consumers alleged that Vizio tracks TV viewers by default, and shares data with companies that send targeted ads to people's phones, tablets and other devices. The first complaint came several days after ProPublica published a report about the company's data practices.

Among other claims, the consumers said Vizio violated the federal Video Privacy Protection Act, which prohibits video providers from disclosing personally identifiable information about people's video-viewing history without their explicit consent.

Vizio agreed to settle the case after Staton rejected the company's arguments to dismiss the lawsuit. Vizio unsuccessfully contended that the video privacy law only applies to companies that rent or sell content, as opposed to device manufacturers. The company also contended that the type of data allegedly disclosed -- including IP addresses, media access control (MAC) addresses, ZIP codes, computer names, and product serial numbers -- wasn't personally identifiable.

Staton sided against Vizio on both points. She said in a ruling issued in March 2017 that Congress intended for the video privacy law to apply to companies that are "in the business of delivering video content."

She also suggested in her earlier ruling that theoretically “anonymous” data, like MAC addresses, could potentially be used to identify individuals. Staton noted at the time that her ruling was only preliminary and could change depending on facts that emerged as the case progressed.

Last year, the Federal Trade Commission brought a separate enforcement action against Vizio for allegedly engaging in an unfair practice by tracking consumers, and for deceiving consumers by failing to adequately explain its data practices. The company agreed to settle the charges by paying $2.2 million to the FTC and the state of New Jersey, which also prosecuted the company.

Staton is expected to hold a hearing December 7, when she will consider whether to grant the deal preliminary approval.