Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Marketing firms settle FTC charges of deceiving customers of AI-powered ad targeting services, (May 26, 2026)

By Jody Coultas, J.D.

The FTC had alleged that Cox Media and two small marketing firms falsely claimed they offered services that could target ads using conversations from consumers’ smart devices.

The FTC announced that CMB Media Corporation d/b/a Cox Media Group and two smaller marketing firms have agreed to pay $930,000 to settle allegations they deceived customers by falsely claiming 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.

Beginning in 2023, Cox Media offered “Active Listening” to its small business customers, which Cox Media claimed would allow its customers to know exactly when a potential consumer was in the market for the small business’s services, in real time and in their local area, based on the consumer’s conversations overheard by smart devices. Cox Media offered Active Listening through a deal with MindSift LLC, which sold the service on a white-label basis. Consumers allegedly “opted-in” to the voice data collection and use when they downloaded apps.

The FTC alleged, contrary to Cox Media’s claims, smart devices with voice collection capabilities did not transmit voice data to the Active Listening service, and Cox Media did not use “AI to detect pertinent conversations.” Rather, the FTC alleged, Cox Media’s advertising and marketing services were nothing more than consumer email list buying, an industry practice where data brokers sell lists of email addresses of individuals presumed to have particular interests or demographic characteristics. Cox Media then resold these lists at a significant markup over the cost of the data.

Further, consumers did not actually consent to the type of data collection at issue, nor did the companies seek consent from consumers. 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. 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. Cox Media told consumers its Active Listening product would allow small businesses to reach consumers in particular localities, but it actually generated lists of consumers from across the country, with only a fraction of consumers located near the small business advertising customer.

The FTC alleged that these practices violated the FTC Act. The FTC also charged MindSift and 1010 Digital Works with a second count of violating the FTC Act by providing CMG with the “means and instrumentalities” to deceive customers through marketing materials, sales pitches and responses to customer questions that misled small businesses about the capabilities of the Active Listening service.

Cox Media agreed to pay must pay $880,000 while both MindSift and 1010 Digital Works will each pay $25,000, which will be used to provide redress to customers impacted by these practices. In addition, each defendant will be prohibited from making any misrepresentation about: (1) the qualities or features of its advertising or marketing services; (2) the collection and use of voice data and whether consumers have provided their consent to collect, use or disclose their voice data; and (3) the geographic targeting capabilities of its advertising or marketing services.

“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.”

Companies: CMB Media Corporation; 1010 Digital Works LLC; MindSift LLC

News: Advertising ConsumerProtection FederalTradeCommissionNews