Cox Media Group is facing a nearly $1 million settlement with the Federal Trade Commission over an AI-powered “Active Listening” advertising service that the agency says falsely claimed to harvest conversations from smart devices to serve targeted ads to consumers.
The FTC, in a decision against CMG and two partner marketing firms, New Hampshire-based MindSift LLC and Wisconsin-based 1010 Digital Works LLC, alleges the trio marketed the service built around a proprietary algorithm that purportedly detected real-time conversations from smart devices and delivered geographically targeted ads within a small business’s desired area.
It did neither, the Commission contends.
No voice data was collected. Geographic targeting was inaccurate. What the three companies actually delivered, according to the FTC, were resold email lists purchased from data brokers at a massive markup.
The complaints carry a further allegation: all three companies told prospective customers that consumers had opted into Active Listening by accepting app terms of service. Clicking through mandatory terms, the FTC flatly states, does not constitute consent for voice data collection inside a consumer’s home.
MindSift and 1010 Digital Works face a second count for supplying CMG with marketing materials, sales pitches, and customer-facing responses that misled small businesses about what the service could actually do.
Under the proposed settlement, CMG will pay $880,000. MindSift and 1010 Digital Works are each on the hook for $25,000. Proceeds will fund redress to affected CMG customers. All three companies are barred from misrepresenting the capabilities of their ad services, the collection and use of voice data, consumer consent, and geographic targeting going forward. The Commission voted 2-0 to issue the complaints and accept the consent agreements.
FTC Bureau of Consumer Protection Director Christopher Mufarrige commented, “It is a basic rule of business that you need to be honest with your customers, and these companies failed to do that.”
The proposed orders will be published in the Federal Register and subjected to a 30-day public comment period before the Commission acts to make them final.
