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Is Your Set-Top Box Telling Advertisers What You Watch?

LOS ANGELES TIMES
http://www.latimes.com/business/lazarus/la-fi-lazarus-set-top-boxes-20160621-snap-story.html

Your TV’s set-top box is ratting you out to advertisers. At least that’s the contention of consumer groups that have filed complaints with federal authorities demanding a crackdown on overzealous data collection.

The complaints to the Federal Communications Commission and Federal Trade Commission say pay-TV companies fail to disclose to customers the extent of their data collection or the ways people’s viewing habits will be used for marketing purposes.

“They’re hiding the ball,” said Dallas Harris, a policy fellow with the advocacy group Public Knowledge who co-wrote the complaints. “They say in their privacy policies that they may collect data on you and they may use it for marketing. They know that’s what they’re doing. So there’s a big disconnect between what they say and what’s actually happening.”

Most consumers know they’ve traded privacy for convenience as information technology plays an ever-larger role in daily activities. From websites visited to goods purchased, almost every move people make these days is watched, recorded and frequently shared by businesses.

Still, Harris said, many people probably think the digital surveillance ends when they settle on the couch to watch TV in the privacy of their home. They don’t realize, she said, that they’re being spied on by their set-top boxes.

“This should be a huge concern for everyone,” Harris told me. “Consumers just aren’t aware of the breadth and depth of information that’s being collected and combined with information from other sources.”

The complaints to the FCC and FTC were filed by Public Knowledge, Santa Monica’s Consumer Watchdog, San Francisco’s TURN, the Center for Digital Democracy and the Consumer Federation of America.

Spokespeople for both federal agencies declined to comment on the complaints or what action may be taken.

The privacy concerns come amid jockeying by the pay-TV industry to dodge a proposed FCC rule that would “unlock” set-top boxes and allow any company to make them. The industry last week said it would be willing to ditch the boxes and instead have customers stream programming via Netflix-style apps. The FCC said more details of the plan are needed.

In the meantime, consumer advocates say, Big Brother is watching.

In their complaints, the groups call for better disclosure of industry practices and to allow pay-TV customers to “opt in” to having their viewing shared with marketers, rather than the current requirement that they “opt out.” They also call upon federal officials to better enforce existing rules.

Title 47, Section 551 of the U.S. Code says that pay-TV companies must disclose “the nature of personally identifiable information collected or to be collected with respect to the subscriber and the nature of the use of such information.”

It also says pay-TV companies “shall not disclose personally identifiable information concerning any subscriber without the prior written or electronic consent of the subscriber.”

I reached out to all the major pay-TV companies. The ones that responded were unanimous in dismissing privacy issues raised in the complaints and said they fully comply with regulations.

“Our disclosures tell our customers exactly how we use that data and provide tools for customers to opt out,” said Jim Cicconi, AT&T’s senior vice president of external and legislative affairs. “Frankly, this complaint is bogus and seems mainly designed to distract the public from the overwhelming bipartisan opposition to the FCC’s controversial set-top box plan.”

Javier Mendoza, a spokesman for Frontier Communications, which took over Verizon’s California FiOS service in April, said the company “is sensitive to privacy issues with respect to the use of identifiable customer information provided over the Internet.”

“Unless we are explicitly given permission to do so, Frontier does not collect and then sell, distribute or exchange personal information with third parties.”

That sounds great until you ask, as I did, if Frontier interprets customers’ failure to opt out as giving “explicit permission” to have their data shared.

Mendoza replied that “Frontier, like many other businesses of all types, has a legitimate business use for customer information,” which didn’t answer my question but sounds like not opting out is as good as an opt-in as far as they’re concerned.

Most pay-TV companies say they don’t need an opt-in because the information they collect is in aggregate form – that is, customers are grouped together and individual viewers are not identified to marketers.

Harris at Public Knowledge called that claim ridiculous. Once aggregate information is combined with data from other sources, she said, it can be very easy to identify specific customers.

“Moreover, they’re telling marketers that they can target individual customers with ads,” she said. “They can only do that if they know and share what individual customers are watching.”

That’s the crux of it. If I see ads for travel and hotel packages because I watch the National Geographic Channel, there’s nothing aggregate going on. They’re looking right at me.

Federal rules say prior consent is required in such cases.

The complaints make a fair point.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.