The FTC settles with Cox, MindSift, and 1010 Digital Works for $930K over claims they falsely said they could use phone mics to spy on users for ad targeting

The Federal Trade Commission (FTC) has reached a settlement with Cox Media Group, MindSift, and 1010 Digital Works concerning allegations of misleading consumers regarding an "active listening" AI-driven marketing service. The companies are obligated to pay nearly $1 million to settle claims that they inaccurately asserted their technology could utilize smartphone microphones to eavesdrop on conversations for the purpose of targeted advertising.

The FTC's investigation revealed that the companies disseminated deceptive marketing materials suggesting they possessed the capability to analyze audio from users' devices for enhanced ad targeting. However, the agency confirmed that the promised surveillance features were not actually functional as presented to clients.

This settlement underscores a pivotal enforcement action aimed at curtailing deceptive methods within the advertising technology landscape. It brings to light the persistent issues surrounding privacy violations and the misleading assertions made by firms engaging in AI-based ad targeting practices.

As part of the settlement, the companies are mandated to refrain from further deceptive actions and it establishes that advertisers are entitled to truthful information regarding the technical capabilities of marketing services, especially concerning the handling of consumer data and the utilization of device sensors.