Marketer that claimed it could tap devices for ad targeting will pay $880K settlement

In November 2023, we reported on dubious claims made by marketing firm Cox Media Group (CMG) Local Solutions. The company advertised a service called Active Listening on a website that said, “It’s true. Your devices are listening to you” and claimed it could use “voice data” to help advertisers target ads to specific people.

Naturally, panic ensued. 404 Media, which initially spotted the website, for instance, wrote that the idea of smartphones listening to people to sell products “may finally be a reality.”

CMG Local Solutions screenshot — A screenshot taken in 2023 from a webpage that CMG has since removed. Credit: Ars Technica via CMG Local Solutions

The idea of a marketing firm using AI to “detect relevant conversations via smartphones, smart TVs, and other devices” in real time—according to a since-deleted CMG blog post from November 2023 (still viewable via the Internet Archive’s Wayback Machine)—has raised alarms.

But it was also apparent that CMG’s claims were unlikely to be true. The company never explained how it could remotely extract enough computing and networking power from users’ devices to clandestinely capture and send voice recordings in “real-time” or obtain more intimate access to people’s homes than law enforcement can without a warrant.

This week, the Federal Trade Commission (FTC) announced that CMG will pay $880,000 to settle the FTC’s allegations that CMG “falsely” claimed “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.”

The money will go to affected customers, the FTC said.

The FTC’s announcement reads:

According to the [FTC-filed] complaints, this service did not, in fact, listen in on consumers’ conversations or use voice data at all—nor did the service accurately place ads in customers’ desired locations. Instead, the service the companies provided consisted of reselling—at a significant markup—email lists obtained from other data brokers.

After working with CMG, two marketing firms, Wisconsin-based 1010 Digital Works LLC and New Hampshire-based MindSift LLC, will each pay $25,000 settlements.

In its since-deleted blog from 2023, CMG claimed that Active Listening relied on an unnamed CMG partner that had a “growing ability to access microphone data on devices.” But when we first covered Active Listening, a company spokesperson admitted to Ars that CMG did not “listen to any conversations or have access to anything beyond a third-party aggregated, anonymized, and fully encrypted data set that can be used for ad placement.”

If it worked, it would be a problem, too

According to the FTC, the marketing companies also claimed that advertising targets opted into Active Listening by agreeing to third-party apps’ terms of service but that this was also not true.

Even if Active Listening worked as CMG, 1010 Digital Works, and MindSift claimed, the FTC would still take issue with it, the government agency said:

If the Active Listening service had functioned as advertised, this collection and use of consumers’ voice data without adequate consent would itself violate Section 5 of the FTC Act.

The FTC had accused the three companies of violating the FTC Act and also accused 1010 Digital Works and MindSift of a second violation by giving CMG the “‘means and instrumentalities’ to deceive customers through marketing materials, sales pitches, and responses to customer questions that misled small businesses” about Active Listening.

Under the settlement terms, the three companies are also prohibited from misrepresenting their services’ capabilities and their collection and use of voice data.

“We are pleased to have this matter resolved,” a CMG spokesperson said in a statement to Wired. “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.”