The Federal Trade Commission has ordered Cox Media Group to pay an $880,000 fine and two other marketing companies $25,000 each to settle allegations they deceived customers by falsely claiming to offer an AI-powered service that could target localized ads based on conversations captured from consumers’ smart devices and that consumers had opted into such targeting.
Cox Media Group, MindSift LLC, and 1010 Digital Works LLC were alleged in three complaints to the FTC that “they deceived customers by claiming they used a special algorithm to listen in on and detect pertinent conversations from smart devices in order to target ads to consumers within a specific geographic region. Contrary to these companies’ claims, however, the marketing service wasn’t based on voice data and consumers hadn’t opted into this service.”
The companies claimed that their “Active Listening” marketing service would allow small businesses to advertise to consumers in the small businesses’ desired locations by listening in on consumers’ conversations overheard by smart devices, in real time, to target advertising. The complaints were not about the listening, but based on the fact that the service did not use voice data or place ads in customers’ desired locations. All the service did was resell email lists from data brokers at what the FTC says was a significant markup.
The FTC also said that Cox and the other companies deceived potential customers by claiming that consumers had opted into the Active Listening service. No consent was sought or obtained, but rather but rather they simply claimed that the opt in occurred by agreeing to a terms of service through an app download.
As part of the order, Cox and the other companies are prohibited from making any misrepresentation for the qualities or features of its advertising or marketing services, the collection and use of voice data and whether consumers have provided their consent to collect, use or disclose their voice data, and the geographic targeting capabilities of its advertising or marketing services.
