In a statement to WIRED, a spokesperson for CMG says, “We are pleased to resolve this matter. Our local marketing team relied on marketing materials provided to us by a third-party vendor regarding their product. We quickly withdrew the materials and discontinued further use of the product.”
MindSift and 1010 Digital Works did not immediately respond to requests for comment. (Disclosure: The author of this article previously worked for the FTC.)
Conspiracy theories about companies listening to people through their phones in order to advertise to them have been repeatedly debunked over the years. Marketing about Active Listening, first reported by 404 Media, fueled those fears. According to the FTC, at one point a website advertising the service included the slogan, “Creepy? Sure. Great for marketing? Sure.”
In three separate complaints, the FTC says CMG made numerous 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. According to the complaints, CMG and other companies also implied that consumers had consented to the collection and use of their voice data.
The FTC alleges that none of this was true.
Instead, the FTC argues that what CMG was offering was “nothing more than buying consumer email lists” and that the lists it resold were “a significant markup on the cost of data.”
As part of their agreements with the FTC, CMG and two other companies promised not to make misrepresentations regarding their marketing services or their collection and use of audio recordings or tapes of consumer conversations.
CMG agreed to pay $880,000, while MindSift and 1010 Digital Works agreed to pay $25,000 each. According to the FTC, a combined $930,000 will be given to businesses that were “affected” by the three companies’ practices – in other words, businesses that purchased the Active Listening Marketing service because they thought the service worked as advertised, including when people agreed to have their voice data used.
The FTC’s complaints don’t allege that it’s illegal to use audio recordings collected from their smart devices to target people with ads, but the FTC clearly has a problem when a company says it does so but actually doesn’t. In a statement, Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, says, “It’s a basic rule of business that you have to be honest with your customers, and these companies failed to do that.”
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