The Federal Trade Commission (FTC) announced May 21 that Cox Media Group and two partner marketing firms will pay a combined $930,000 to settle charges they sold a fabricated AI advertising service falsely claiming to target ads based on conversations from consumers’ smart devices.
CMG Media Corporation, doing business as Cox Media Group (CMG), will pay $880,000. New Hampshire-based MindSift LLC and Wisconsin-based 1010 Digital Works LLC will each pay $25,000, with funds used to refund affected CMG customers.
Branded “Active Listening,” the service was marketed to small businesses as a real-time listener that would detect pertinent consumer conversations from smartphones and smart speakers to serve targeted regional ads. CMG’s website read, “It’s True. Your Devices Are Listening to You.”
According to the FTC’s complaints, the service did none of that. The companies instead resold email lists from other data brokers at a significant markup and did not deliver ads to customers’ requested locations.
“The product these companies marketed did not do what they claimed it did, and they 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.
The FTC separately charged MindSift and 1010 Digital Works with a second count for providing CMG the “means and instrumentalities” to deceive, making both vendors independently liable under the FTC Act for supplying the marketing materials and sales pitches used to mislead small business clients.
Under the proposed consent orders, all three companies are barred from misrepresenting their advertising capabilities, voice data collection, consumer consent, and geographic targeting.
A CMG spokesperson told Wired the company “relied on marketing materials provided to us by a third-party vendor” and stopped using the product after withdrawing those materials.
