The Federal Trade Commission finalized orders requiring Cox Media Group (CMG) and two other firms to pay a total of $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 consumersâ smart devices and that consumers had opted into such targeting.
In three separate complaints first announced in May, the FTC alleged that Georgia-based media and marketing company CMG Media Corporation, which does business as Cox Media Group, and two marketing firms it worked with, New Hampshire-based MindSift LLC and Wisconsin-based 1010 Digital Works LLC, deceived customers by claiming they used a special algorithm to listen in on and detect pertinent conversations from smart devices in order to target ads to consumers within a specific geographic region.
Contrary to these companiesâ claims, however, the marketing service wasnât based on voice data, and consumers hadnât opted into this service. If the service had functioned as advertised, this collection and use of consumersâ voice data without adequate consent would itself violate the FTC Act.
Under the proposed orders settling the FTCâs allegations, CMG must pay $880,000 while both MindSift and 1010 Digital Works must each pay $25,000, which will be used to provide redress to CMG customers impacted by these practices. In addition, each defendant is prohibited from making any misrepresentation about the qualities or features of its advertising or marketing services; the collection and use of voice data and whether consumers have provided their consent to collect, use or disclose their voice data; and the geographic targeting capabilities of its advertising or marketing services.
After receiving two comments on the proposed settlement orders, the Commission voted 2-0 to give final approval to the consent agreements.
The Federal Trade Commission works to promote competition and protect and educate consumers. The FTC will never demand money, make threats, tell you to transfer money, or promise you a prize. Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at ReportFraud.ftc.gov. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts.
Source: Press Release Feed
