FTC says ‘creepy’ listening tool for targeted ads didn’t actually work

Federal Trade The commission announced Thursday that Cox Media Group and two other marketing companies, MindSift LLC and 1010 Digital Works, agreed to pay nearly $1 million collectively to settle allegations that they deceived their clients — other companies — by claiming they could help. Targeted ads Based on audio recordings collected from consumers’ smart devices via a marketing service called active listening.

In a statement to WIRED, a CMG spokesperson said: “We are pleased that this issue has been resolved. Our local marketing team relied on marketing materials provided to us by a third-party vendor about their product. We quickly recalled the materials and have discontinued further use of the product.”

MindSift and 1010 Digital Works did not immediately respond to a request for comment. (Disclosure: The author of this article previously worked for the Federal Trade Commission.)

Over the years, there have been conspiracy theories about companies eavesdropping on people’s phones in order to serve them ads expose. Marketing around active listening, which was first reported by 404 mediaAnd fuel those fears. According to the FTC, at one point, a website advertising the service included the slogan “Scary? Sure. Great for marketing? Sure.”

In three separate complaints, the FTC says CMG made several claims about its ability to collect consumer conversations from “smartphones, smart TVs, smart speakers and other devices” and then use artificial intelligence to target ads to potential customers based on where they live and what they said. CMG and the other companies also said consumers consented to the collection and use of their voice data, according to the complaints.

The FTC claims that none of these things are true.

Instead, the FTC asserts that what CMG was offering was “nothing more than purchasing a consumer email list” and that the lists it resold were “a significant markup over the cost of the data.”

As part of their agreements with the FTC, CMG and the two other companies promised not to misrepresent their marketing services or collect and use audio recordings or transcripts of consumers’ conversations.

CMG agreed to pay $880,000, while MindSift and 1010 Digital Works each agreed to pay $25,000. The total $930,000 will go to companies that were “affected” by the three companies’ practices, according to the FTC — in other words, companies that bought the active listening marketing service because they were under the impression that the service worked as advertised, including people consenting to the use of their audio data.

The FTC’s complaints don’t include claims about whether it’s illegal to use audio recordings collected from people’s smart devices to target them with ads, but the FTC clearly has a problem when a company says it does that but actually doesn’t. “It’s a cardinal rule in business that you need to be honest with your customers, and these companies have failed to do that,” Christopher Movrage, director of the FTC’s Bureau of Consumer Protection, said in a statement.