FTC Says Cox Media Group Misled Advertisers, Imposes Nearly $1 Million Fine.

For years consumers have joked — or worried — that their phones were secretly listening to them. Now federal regulators say Cox Media Group built an advertising pitch around exactly that idea, selling small businesses what the government calls a “creepy” and technologically impossible promise.

The Federal Trade Commission has ordered CMG and two digital marketing firms led by Dmitriy Shteynbuk to pay nearly $1 million to settle allegations they deceived advertisers by marketing a service called “Active Listening,” which purportedly used artificial intelligence and data from smart devices to identify consumers discussing products or services in real time. But according to an FTC complaint, none of it was real.

The case centers on a marketing product introduced in 2023 that CMG sold to local businesses. Through presentations, website materials and sales pitches, the company promoted “Active Listening” as a way for advertisers to identify potential customers at the precise moment they were discussing products or services around smart devices. FTC investigators say the service was pitched as a breakthrough tool powered by “voice data” and AI.

CMG marketing materials read “Don’t Just Know What They’re Searching For—Know What They’re Talking About,” while another pitch said the service could identify buyers “based on casual conversations in real time.” One promotional message acknowledged the privacy implications head-on, asking: “Creepy? Sure. Great for marketing? Definitely.”

According to the government, CMG told clients its technology partner could aggregate and analyze voice data from smartphones, tablets and other devices to determine when consumers were in the market for particular products. It also claimed advertisers could target people within precise geographic areas and receive lists of consumers generated from conversations happening nearby.

The FTC says reality looked far different. Rather than collecting smart device audio or using AI to monitor conversations, regulators allege Active Listening relied on a much more conventional practice of purchasing consumer email lists from data brokers and reselling them at substantial markups. According to the complaint, the service “did not collect or use voice data in any manner.”

FTC filings say sales presentations became increasingly specific when potential customers questioned how the technology worked. The complaint says CMG employees asked prospective clients, “Where do you want us to listen?” and cited products and platforms including Alexa, Google, Samsung and OpenTable as examples of data sources feeding the system. Employees also allegedly told advertisers that “voice related behaviors make up 40%-50% of behavior volumes we consume.”

The FTC also challenges the company’s claims that consumers had consented to the use of their voice data. CMG allegedly told clients that consumers had effectively opted in through app permissions and terms-of-service agreements. Regulators say because no voice data collection was occurring in the first place, those representations were also misleading.

Geotargeting claims also drew FTC scrutiny. The complaint says advertisers were told they could reach people within specific local radiuses, but customer lists often contained consumers from across the country rather than the promised nearby markets.

Under the proposed orders settling the FTC’s allegations, CMG must pay $880,000 while both MindSift and 1010 Digital Works will each pay $25,000, some of which will go back to clients. In addition to the fines, the companies are also prohibited from making any misrepresentation about the qualities or features of its advertising or marketing services, including geographic targeting capabilities and use of voice data.

“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,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “It is a basic rule of business that you need to be honest with your customers, and these companies failed to do that.”

CMG says in a statement that it is glad to have the case resolved, and that it no longer offers the products included in the complaint. “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,” the company says.