The Federal Trade Commission announced on Thursday that Cox Media Group and two other marketing companies, MindSift LLC and 1010 Digital Works, have agreed to collectively pay nearly $1 million to settle allegations that they deceived their customers—other businesses—by claiming that they could help target ads based on audio recordings collected from consumers’ smart devices via a marketing service called Active Listening.
In a statement to WIRED, a spokesperson for CMG says, “We are pleased to have this matter resolved. Our local marketing team relied on marketing materials provided to us by a third-party vendor about their product. We withdrew the materials expeditiously and stopped further use of the product.”
MindSift and 1010 Digital Works did not immediately respond to a request for comment. (Disclosure: The author of this article previously worked for the FTC.)
Over the years, conspiracy theories about companies listening to people through their phones in order to serve them ads have been repeatedly debunked. The marketing about Active Listening, which was first reported by 404 Media, stoked those fears. According to the FTC, at one point a website advertising the service included the slogan, “Creepy? Sure. Great for marketing? Definitely.”
In three separate complaints, the FTC says that CMG made several claims about its ability to collect consumers’ conversations from “smartphones, smart TVs, smart speakers and other devices” and then use AI to target ads to potential customers based on where they live and what they said. CMG and the other companies also said that consumers had consented to the collection and use of their voice data, according to the complaints.
The FTC alleges that none of those things were true.
Instead, the FTC contends that what CMG was offering was “nothing more than consumer email list buying” and that the lists it resold were “a significant markup over the cost of the data.”
As part of their agreements with the FTC, CMG and the two other companies promised not to make misrepresentations about their marketing services or their collection and use of audio recordings or transcripts of consumer conversations.
CMG agreed to pay $880,000, while MindSift and 1010 Digital Works each agreed to pay $25,000. The combined $930,000 will go to businesses that were “impacted” by the three companies’ practices, according to the FTC—in other words, businesses that purchased the Active Listening marketing service because they were under the impression that the service worked as advertised, including that people consented to having their voice data used.
The FTC’s complaints don’t make allegations about whether it’s illegal to use audio recordings collected from people’s smart devices to target them with ads, but the FTC clearly has a problem when a company says it does that but actually doesn’t. In a statement, Christopher Mufarrige, the FTC’s director of the bureau of consumer protection, says, “It is a basic rule of business that you need to be honest with your customers, and these companies failed to do that.”
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