Cox Media Group has agreed to pay $880,000 to settle allegations brought by the Federal Trade Commission (FTC) over an advertising product that claimed to use artificial intelligence to monitor conversations from smart devices and deliver targeted advertising to consumers.
The proposed settlement resolves claims that Cox Media Group, along with marketing firms MindSift LLC and 1010 Digital Works LLC, deceptively marketed an “Active Listening” advertising service to small businesses by falsely suggesting it could capture and analyze voice data from devices like smartphones and smart speakers.
According to the FTC’s complaint, the companies promoted the service as using a proprietary algorithm capable of detecting real-time conversations and serving geographically targeted ads to nearby consumers. The agency said the claims were untrue.
Instead, regulators allege the companies relied on email marketing lists purchased from third-party data brokers, which were then resold to advertisers at substantial markups. The FTC also contends that no consumer voice data was ever collected through the service, despite representations made to potential customers.
The complaint further accuses the companies of misleading businesses by claiming consumers had effectively consented to the collection of voice data by agreeing to app terms of service. The FTC rejected that argument, stating that accepting mandatory terms does not amount to informed consent for in-home voice monitoring.
MindSift and 1010 Digital Works were separately accused of supplying Cox Media Group with sales materials, marketing pitches and customer responses that overstated the capabilities of the Active Listening platform and reinforced misleading claims about the technology.
Under the proposed consent agreements, MindSift and 1010 Digital Works will each pay $25,000. The FTC said funds collected through the settlements will be used to provide redress to affected Cox Media Group customers. The agreements also prohibit all three companies from making deceptive claims about advertising capabilities, voice-data collection practices, consumer consent and geographic targeting in the future.
“It is a basic rule of business that you need to be honest with your customers, and these companies failed to do that,” said Christopher Mufarrige,the Director of the FTC’s Bureau of Consumer Protection, in a statement released earlier this week.
The Commission voted 2-0 to issue the complaints and accept the proposed settlements. The orders will now be published in the Federal Register for a 30-day public comment period before the FTC decides whether to finalize them.
Cox Media says it no longer sells the products in question.
“Our local marketing team relied on marketing materials provided to us by a third-party vendor about their product,” a spokesperson for the company said. “We withdrew the materials expeditiously and stopped further use of the product.”
