Texas Attorney General Ken Paxton is at it again, this time with a set of enforcement actions against five major connected television manufacturers. The complaints allege that the manufacturers used their connected televisions to unlawfully collect and monetized detailed viewing data through Automatic Content Recognition technology without adequate consumer disclosure or consent. 

What Happened?

Unlike many other consumer products, the inflation-adjusted price index for TVs has decreased substantially in recent years. The worst-kept secret underlying this trend is that this upfront hardware prices are subsidized by sales and shares of personal data. Regulators have increasingly scrutinized this area accordingly, with enforcement sweeps and actions.

Across these complaints, Texas alleges a common fact pattern. CTVs are configured to enable Automatic Content Recognition (a technology that allows a device to identify what is on its screen by matching audio or visual signals to a content database) by default, while disclosures about that functionality are buried or opaque. As a result, consumers are not meaningfully informed that their televisions are capturing snippets of everything shown on screen, whether displayed through streaming apps, linear TV, HDMI inputs or screen-casting, and that this data is used to build advertising profiles.

Early returns have favored Texas. On December 17, a court granted a temporary restraining order against one manufacturer to halt personal data collection through ACR during litigation. 

Key Takeaways

A few features of these cases deserve highlighting:

1. These claims do not rely on Texas' comprehensive privacy statute, the Texas Data Privacy and Security Act, instead leveraging its deceptive trade practices law. This choice is not immediately obvious, particularly given the apparent availability of claims grounded in dark patterns, deficient notice, or ineffective opt-out mechanisms. The AG's focus, however, appears less on misconfigured privacy controls and more on an alleged failure of honest dealing with consumers at the point of sale and setup. What is clear is Texas' continued willingness to deploy any of its several privacy-adjacent laws to enforce unlawful data practices.  
2. Until now, these efforts had largely targeted streaming service providers, not manufacturers. Clearly, any business that touches the CTV stack should consider the extent to which it may be affected by this uptick in scrutiny across its industry.
3. The complaints repeatedly quantify the number of households affected, the penetration rates of each manufacturer's TVs, and the volume of data captured. The AG takes issue not only with ACR as a practice, but also that it operates continuously across millions of devices, generating troves of behavioral data. For Texas, in this case and others, scale is a clear aggravating factor.
4. Texas places great emphasis on the household penetration, which can reveal sensitive data. Controllers should account for the context their products; the very nature of CTV data collection being in the living room and bedroom heightened the allegations it faced.
5. In the complaints and press releases, AG Paxton continually raises concern about data sharing with China. Disclosures to disfavored and designated countries has been an enforcement priority at the state and federal levels, and any business with international relationships should adjust their risk profile accordingly.