Cox Media Group pays $880K for falsely claiming AI could tap devices for ad targeting

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." 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." The FTC said that CMG, 1010 Digital Works, and MindSift marketed Active Listening to small businesses and falsely claimed that the service would help the businesses target customers in specific geographies. "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, director of the FTC's Bureau of Consumer Protection, in an accompanying statement. 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." Active Listening may not have been real, but smart devices can still capture data in less obvious ways. More realistic risks include Meta smart glasses sharing intimate recordings, smart TVs tracking viewing habits, Ring cameras spying on users, and voice assistants listening without a proper prompt.

'Creepy' Listening Tool for Targeted Ads Didn't Actually Work, FTC Says

The Federal Trade Commission announced on Thursday that Cox Media Group and two other marketing companies, MindSift LLC and 1010 Digital Works, have agreed to collectively pay nearly $1 million to settle allegations that they deceived their customers -- other businesses -- by claiming that they could help target ads based on audio recordings collected from consumers' smart devices via a marketing service called Active Listening. In a statement to WIRED, a spokesperson for CMG says, "We are pleased to have this matter resolved. 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." MindSift and 1010 Digital Works did not immediately respond to a request for comment. (Disclosure: The author of this article previously worked for the FTC.) Over the years, conspiracy theories about companies listening to people through their phones in order to serve them ads have been repeatedly debunked. The marketing about Active Listening, which was first reported by 404 Media, stoked those fears. According to the FTC, at one point a website advertising the service included the slogan, "Creepy? Sure. Great for marketing? Definitely." In three separate complaints, the FTC says that CMG made several claims about its ability to collect consumers' conversations from "smartphones, smart TVs, smart speakers and other devices" and then use AI to target ads to potential customers based on where they live and what they said. CMG and the other companies also said that consumers had consented to the collection and use of their voice data, according to the complaints. The FTC alleges that none of those things were true. Instead, the FTC contends that what CMG was offering was "nothing more than consumer email list buying" 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 make misrepresentations about their marketing services or their collection and use of audio recordings or transcripts of consumer conversations. CMG agreed to pay $880,000, while MindSift and 1010 Digital Works each agreed to pay $25,000. The combined $930,000 will go to businesses that were "impacted" by the three companies' practices, according to the FTC -- in other words, businesses that purchased the Active Listening marketing service because they were under the impression that the service worked as advertised, including that people consented to having their voice data used. The FTC's complaints don't make allegations 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. In a statement, Christopher Mufarrige, the FTC's director of the bureau of consumer protection, says, "It is a basic rule of business that you need to be honest with your customers, and these companies failed to do that."

Cox Media fined for claiming it used AI to track consumer conversations

May 21 (Reuters) - The U.S. Federal Trade Commission fined Cox Media Group and two other companies for falsely claiming they could use AI to target ads based on conversations consumers had near their smart devices, the agency said on Thursday. Here are some details: o The company falsely told potential advertisers in 2023 that it used artificial intelligence and voice-processing technology to "identify buyers based on casual conversations in real time," the FTC said. o Cox also falsely told clients that consumers had opted in to voice data collection and use, the agency said. o "Creepy? Sure. Great for marketing? Definitely," the company told prospective clients on its website, according to the FTC. o The company agreed to pay $880,000, while MindSift and 1010 Digital Works, two smaller marketing firms Cox worked with, each agreed to pay $25,000. o Cox operates radio and broadcast television stations in several states, and has a digital marketing arm focused on streaming and online ads. o Cox said it had relied on marketing materials provided by a third-party vendor about the vendor's product, which it has stopped using. MindSift and 1010 Digital Works did not immediately reply to requests for comment. (Reporting by Jody Godoy in New York; Editing by Mark Porter)