WASHINGTON, D.C. — The Federal Trade Commission reached settlements requiring Cox Media Group and two affiliated marketing firms to pay a combined $930,000 after regulators alleged the companies falsely claimed to use artificial intelligence to monitor consumer conversations through smart devices for targeted advertising.
The FTC alleged the companies marketed an “Active Listening” advertising product to small businesses by claiming the service could capture and analyze conversations occurring near smart devices in real time to deliver geographically targeted advertising.
According to the agency’s complaints, the technology did not use voice data and instead relied on email marketing lists purchased from third-party data brokers and resold at significant markups.
The settlements mark one of the FTC’s more direct enforcement actions targeting AI-related marketing claims as regulators increase scrutiny of companies promoting consumer surveillance or data-collection capabilities tied to artificial intelligence.
The agency alleged MindSift LLC and 1010 Digital Works LLC worked with Cox Media Group to promote the service using sales materials and customer pitches that misrepresented the platform’s capabilities.
The FTC further alleged the companies falsely claimed consumers had consented to the collection and use of voice data through app opt-ins and terms-of-service agreements.
“Clicking through mandatory terms of service does not constitute ‘opt-in consent’ for such an invasive service or for use of consumers’ voice data from inside their homes,” the FTC stated in its complaint.
Regulators said the service, if it had operated as described, could itself have violated federal consumer-protection law because of the alleged absence of meaningful consent.
Under the proposed settlements, Cox Media Group will pay $880,000, while MindSift and 1010 Digital Works will each pay $25,000. The FTC said the funds will be used for customer redress.
The proposed orders also prohibit the companies from misrepresenting the capabilities of advertising services, the collection or use of voice data, consumer consent practices, and geographic-targeting functionality.
FTC Bureau of Consumer Protection Director Christopher Mufarrige said the case centered on both deceptive technology claims and misleading representations regarding consumer consent.
“Not only did the product these companies marketed not do what they claimed it did, but they also misled potential customers by claiming consumers had opted into this service when it’s clear they did not,” Mufarrige said.
The commission voted 2-0 to approve the administrative complaints and proposed consent agreements. The settlements remain subject to public comment and final commission approval following publication in the Federal Register.
Under FTC rules, violations of finalized consent orders can carry civil penalties of up to $53,088 per violation.
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