FTC Finalizes Orders with Cox Media Group, Two Other Firms Settling Charges They Deceived Customers About “Active Listening” AI-Powered Marketing Service

The Federal Trade Commission finalized orders requiring Cox Media Group (CMG) and two other firms to pay a total of $930,000 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.

In three separate complaints first announced in May, the FTC alleged that Georgia-based media and marketing company CMG Media Corporation, which does business as Cox Media Group, and two marketing firms it worked with, New Hampshire-based MindSift LLC and Wisconsin-based 1010 Digital Works LLC, 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. If the service had functioned as advertised, this collection and use of consumers' voice data without adequate consent would itself violate the FTC Act.

Under the proposed orders settling the FTC's allegations, CMG must pay $880,000 while both MindSift and 1010 Digital Works must each pay $25,000, which will be used to provide redress to CMG customers impacted by these practices. In addition, each defendant is prohibited from making any misrepresentation about 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.

After receiving two comments on the proposed settlement orders, the Commission voted 2-0 to give final approval to the consent agreements.