Cox Media Group and two marketing partners have reached a resolution with federal regulators over an ad-targeting service pitched as artificial intelligence capable of listening in on consumers’ smart devices that the FTC said never actually existed.
Radio Ink first reported on the FTC’s initial complaints against CMG, MindSift and 1010 Digital Works in May. The case centers on Active Listening, a marketing service the three companies claimed used a proprietary algorithm to detect real-time conversations picked up by consumers’ smart devices and deliver geographically targeted ads for small businesses.
According to the FTC, the service didn’t work that way at all. No voice data was collected, and ads weren’t accurately placed within customers’ target areas. What businesses actually received, regulators found, was email lists resold from data brokers at a large markup.
As FTC Bureau of Consumer Protection Director Christopher Mufarrige said in May, “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. It is a basic rule of business that you need to be honest with your customers, and these companies failed to do that.”
The FTC also determined that all three companies misrepresented consumer consent, telling small business customers that end users had opted into Active Listening simply by accepting standard app terms of service. Clicking through mandatory terms, the agency stated, doesn’t satisfy opt-in consent requirements for collecting voice data inside someone’s home.
Under the finalized orders, CMG will pay $880,000, while MindSift LLC and 1010 Digital Works LLC will each pay $25,000, with funds from the settlement going toward redress for affected customers. Commissioners voted 2-0 to grant final approval after the proposed orders drew two public comments during a required 30-day review period.
In addition to the monetary loss, CMG, MindSift and 1010 Digital Works are barred from misrepresenting the capabilities of their advertising services, how they collect and use voice data, whether consumers have consented to that collection, and the accuracy of their geographic ad targeting.
