Conspiracy theories about advertisers secretly listening to our phones have been around for years. Now, three companies are in trouble for allegedly pretending they could do just that.
The Federal Trade Commission announced Thursday that Cox Media Group and two of its partners will pay nearly $1 million to settle allegations that they misled customers about an AI-powered ad service that they claimed could target consumers based on conversations captured via their smart devices.
According to the FTC, the companies, which also include MindSift and 1010 Digital works, allegedly claimed their “Active Listening” service used a special algorithm to detect relevant conversations captured from phones and other devices to target ads to people in specific geographic areas.
Cox Media Group first made headlines for the service back in 2023, when its own marketing leaned directly into the creepiness of the conspiracy theories.
“It’s True. Your Devices Are Listening to You,” the company’s website read at the time. “With Active Listening, CMG can now use voice data to target your advertising to the EXACT people you are looking for.”
The ideas was that small businesses could target people who used certain phrases in their everyday conversations. One example the company used at the time was: “The AC is on it’s last leg!”
Turns out, all of that was fake. The FTC says the service did not actually listen in on consumers’ conversations. Instead, the service allegedly consisted of reselling email lists obtained from data brokers at a significant markup.
“Not only did the product these companies marketed not do what they claimed it did, but they also misled potential customers by claiming consumers had opted into this service when it’s clear they did not,” Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, said in a press release. “It is a basic rule of business that you need to be honest with your customers, and these companies failed to do that.”
The companies are also accused of misleading customers by claiming consumers agreed to be part of Active Listening when they accepted the terms of service for the apps they used.
“Clicking through mandatory terms of service does not constitute ‘opt-in consent’ for such an invasive service or for use of consumers’ voice data from inside their homes,” the FTC said.
The FTC also noted that the service would have violated Section 5 of the FTC Act if it had worked as advertised and if the companies never got proper consumer consent.
Under the proposed settlement, Cox Media Group will pay $880,000, while MindSift and 1010 Digital Works will each pay $25,000. The money will be used to provide refunds to impacted CMG customers.
Cox Media Group and MindSift did not immediately respond to requests for comment. 1010 Digital Works could not be reached for comment. Its website now redirects to a page featuring a quote often attributed to Albert Einstein, “The measure of intelligence is the ability to change.”
A Cox Media Group spokesperson, however, told Wired, “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.”
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