The Federal Trade Commission today announced that Cox Media Group and two partner marketing firms must pay a combined $930,000 to settle allegations that they deceived small business customers by selling what was marketed as an AI-powered advertising service capable of targeting ads based on overheard conversations from smart devices - a capability the FTC says never existed.

The settlement, announced on May 21, 2026, involves three separate complaints filed against CMG Media Corporation, doing business as Cox Media Group, New Hampshire-based MindSift LLC, and Wisconsin-based 1010 Digital Works LLC. CMG is required to pay $880,000, while MindSift and 1010 Digital Works will each pay $25,000. The funds will be used to provide redress to CMG customers affected by these practices, according to the FTC.

The "Active Listening" service

The product at the centre of the action was called Active Listening, launched in 2023. CMG, headquartered at 1601 W. Peachtree Street NE in Atlanta, Georgia, began selling the service to small businesses that year, according to the FTC's complaint against CMG. MindSift, operating from 142 Main Street, Suite 405, Nashua, NH 03060, supplied the underlying service to CMG on a white-label basis. 1010 Digital Works LLC, a single-member Wisconsin company operating out of 11923 N. Wilderness Ct., Mequon, WI 53092, worked in concert with MindSift to develop and market the offering. Its sole member and owner is Dmitriy Shteynbuk, also known as Dmitry Shteynbuk and Dmitry Shteyn, according to the 1010 Digital complaint.

The service was described by the companies as a targeting tool that would let small businesses 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," according to the FTC's complaint against CMG.

Marketing materials published on CMG's website, cmglocalsolutions.com, made expansive claims about what the technology could do. Among the statements cited in the complaint: "Voice data goes beyond search engine data, so every casual conversation between two consumers becomes a tool for you to target, retarget, and retain customers. Our technology is on the cutting edge of voice data processing. We can identify buyers based on casual conversations in real time. It may seem like black magic, but it's not - it's AI." The website also stated that "the growing ability to access microphone data on devices like smartphones and tablets enables our technology partner to aggregate and analyze voice data during pre-purchase conversations," leading to "unprecedented understanding of consumer behavior."

CMG's sales pitch was geographically specific. The company claimed advertisers could purchase exclusive territories in "10 or 20-mile radiuses," with options for "regional, state, and national coverage," according to its complaint. When small business customers asked how the system worked in sales presentations, CMG employees told them the service listened in on conversations through apps and devices from major companies. The complaint states that employees "listed the top apps to prospects so [the customers] know they are big players," citing Alexa, Google, OpenTable, and Samsung as among "570 different data sources" that purportedly supplied voice data. CMG also claimed that "voice related behaviors make up 40%-50% of behavior volumes we consume."

What the service actually did

None of those claims were accurate, according to the FTC. Smart devices did not transmit voice data to any of the three companies. The Active Listening service did not collect or use voice data in any manner. What the companies were actually selling was considerably more mundane: consumer email lists purchased from third-party data brokers - an industry practice where data brokers compile and sell lists of email addresses for individuals presumed to have particular interests or demographic characteristics. According to the FTC complaints, the companies then resold these lists at a significant markup over what they had paid for the data.

The geotargeting claims were also false. Although the companies told customers they could reach consumers within a specific local radius - for example, within ten miles of Orlando, Florida - the lists they generated contained consumers from across the country, with only a fraction of addresses located near the advertising client's intended geography.

This gap between the advertised capability and the actual product is the core of the FTC's action. The FTC stated that if the Active Listening service had functioned as advertised, the collection and use of consumers' voice data without adequate consent would itself have violated Section 5 of the FTC Act - a notable framing that turns the marketing fiction against the sellers twice over.

A second strand of the complaints concerns consumer consent. The three companies told prospective clients that consumers had "opted in" to the Active Listening service. When potential customers raised concerns about the legality of the service, the companies insisted users had agreed to voice data collection through terms of service they accepted when downloading apps or setting up devices. Marketing materials prepared by MindSift and ghost-written for CMG to deploy with sceptical customers stated: "You may not realize it, but when you download apps, set up new devices you 'accept' the terms, and those terms include allowing them to access your microphone."

That argument did not hold with the FTC. The Commission's position is that clicking through mandatory terms of service does not constitute opt-in consent for an invasive service or for the use of voice data collected inside consumers' homes. The companies, in any case, had never actually collected voice data - meaning the consent defence was both legally insufficient and factually irrelevant.

MindSift also separately represented to CMG that "all data we sell is sourced exclusively from users who have explicitly opted in to share their data," according to the MindSift complaint. MindSift also ghost-wrote responses for CMG to deploy when customers questioned the lawfulness of the service, including language claiming: "Google will ... validate they are opted in." The Commission found this conduct amounted to a second count under the FTC Act: furnishing CMG with the means and instrumentalities to engage in deceptive practices. MindSift and 1010 Digital Works both face this second count, while CMG faces only the primary misrepresentation count.

The technical architecture that was claimed

The sales materials described a specific technical pipeline. In presentations and ghost-written customer responses, the companies described a system that consumed "opted-in user behaviors" unmatched to a user at the time of acquisition. An algorithm would then use a personal identifier - most commonly an email address - to match "behaviors generated via Voice from IoT devices, Search, DSPs, Data Providers, Publishers" to predict where a consumer was in the "buying funnel." The system would output a "Custom Audience List" that could be uploaded into advertising platforms such as Facebook and Google. The companies claimed voice-related behaviors accounted for 40% to 50% of the behavior volumes they processed.

In presentations from 2023 through mid-2024, the companies made specific mechanistic claims: that Active Listening relies on "the power of voice," that it can "identify buyers based on real-time conversations," and that the technology "harvest[s] virtually all pre-purchase discussions in real time around the specific keywords set, based on your company's product or service." The phrase "Yes, your devices are listening to you" appeared in sales materials from both MindSift and 1010 Digital Works.

CMG's presentations described the technical process further: "Active listening begins and is analyzed via AI to detect pertinent conversations via smartphones, smart tvs, smart speakers and other devices." Clients were also asked, as part of the sales pitch, "Where do you want us to listen?" - a line that MindSift furnished for CMG's use.

In reality, the FTC found no part of this technical description was operative. No AI was processing conversations. No smart devices were involved. The pipeline began and ended with data broker email lists.

FTC enforcement posture

The Commission voted 2-0 to issue the proposed administrative complaints and accept consent agreements with all three companies. The commissioners in this proceeding are Chairman Andrew N. Ferguson and Mark R. Meador.

"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, according to the FTC press release. "It is a basic rule of business that you need to be honest with your customers, and these companies failed to do that."

Under the proposed consent orders, all three companies are prohibited from making misrepresentations about the qualities or features of their advertising or marketing services, about the collection and use of voice data and whether consumers have provided consent, and about the geographic targeting capabilities of their services.

The consent agreements will be published in the Federal Register and will be subject to a 30-day public comment period before the Commission decides whether to make the orders final. Once a consent order becomes final, each violation carries a potential civil penalty of up to $53,088. Lead staff on these matters include Michael Sherling and Andy Hasty with the FTC's Bureau of Consumer Protection.

Why this matters for the advertising industry

The case sits at the intersection of two issues that have shaped regulatory attention to the advertising technology sector in recent years: AI-washing - making exaggerated or fabricated claims about AI capability - and consent frameworks for data collection.

The FTC has been building its enforcement posture around AI-related deception since it launched Operation AI Comply in September 2024, which targeted companies using AI claims for unfair or deceptive practices. The Cox Media Group case extends that enforcement logic into the advertising services market specifically. The FTC has also established a 2026-2030 strategic plan that identifies deceptive advertising and privacy violations as priority areas, suggesting this kind of enforcement is likely to continue.

The data broker dimension is also notable. The Active Listening service was, in essence, a resale operation built on purchased email lists - a practice the FTC described as standard industry practice, but one that was being sold at inflated prices to small businesses who believed they were buying something categorically different. The FTC has previously acted against data brokers that misrepresent the provenance or precision of the audience data they provide - the InMarket Media case from January 2024 involved allegations that the company failed to obtain informed consent from users whose location data it collected and sold.

The consent claim that clicking through app terms of service constitutes opt-in for voice collection - and the FTC's rejection of that argument - will also resonate in broader ad tech discussions around consent validity. The FTC's position on hashed data established that technical transformation of personal data does not dissolve privacy obligations. The Active Listening case extends that principle: burying claimed consent in mandatory app terms does not constitute the explicit opt-in that an invasive data collection service would require.

For small businesses that purchased Active Listening products, the case illustrates how difficult it can be to evaluate technical claims in advertising services. The companies had detailed, plausible-sounding explanations for how the technology worked, references to major tech companies whose apps were supposedly involved, and specific percentage figures for behavior volumes. None of it was accurate. Funds from the settlement will be used to provide redress to CMG customers who were affected.

For the broader advertising industry, the SECURE Data Act currently moving through Congress would, if enacted, create a unified national framework for consumer privacy rights and place enforcement authority with the FTC. The Active Listening case demonstrates the kind of conduct federal enforcement can reach even under existing law - a signal to vendors that AI capability claims carry legal risk when they do not correspond to the actual service being sold.

Timeline

  • 2023 - CMG Media Corporation begins offering the Active Listening service to small business customers after acquiring it from MindSift LLC on a white-label basis; MindSift and 1010 Digital Works also sell the service directly to small businesses
  • 2023 - CMG publishes marketing claims on cmglocalsolutions.com describing voice data processing capability from smartphones, smart speakers, and other connected devices
  • 2023-mid-2024 - CMG, MindSift, and 1010 Digital Works conduct customer presentations making claims including that Active Listening "harvest[s] virtually all pre-purchase discussions in real time"
  • January 2024 - The FTC bans InMarket Media from selling or licensing precise location data, foreshadowing scrutiny of ad data provenance claims (PPC Land)
  • July 2024 - The FTC warns that hashed data is not anonymous, reinforcing its position on privacy claims in advertising data (PPC Land)
  • September 25, 2024 - The FTC launches Operation AI Comply, targeting companies using AI for deceptive practices (PPC Land)
  • Mid-2024 - Active Listening is discontinued or substantially wound down by the companies involved
  • April 6, 2026 - The FTC publishes its 2026-2030 strategic plan identifying deceptive advertising and AI-related enforcement as priorities (PPC Land)
  • May 21, 2026 - The FTC announces $930,000 total settlement with CMG Media Corporation, MindSift LLC, and 1010 Digital Works LLC; Commission votes 2-0 to issue administrative complaints and accept consent agreements

Summary

Who: CMG Media Corporation (doing business as Cox Media Group), MindSift LLC, and 1010 Digital Works LLC, along with its sole member Dmitriy Shteynbuk. The proceeding is before FTC Commissioners Andrew N. Ferguson (Chairman) and Mark R. Meador.

What: The FTC settled charges that the three companies deceived small business customers by marketing a service called Active Listening, which they claimed used AI to detect real-time conversations from smart devices and target ads within specific geographic areas. The service was, in fact, a resale operation built on purchased consumer email lists. Total penalties amount to $930,000: $880,000 from CMG, and $25,000 each from MindSift and 1010 Digital Works.

When: The Active Listening service was offered from 2023 through mid-2024. The FTC announced the settlement on May 21, 2026. The consent agreements are subject to a 30-day public comment period after Federal Register publication before the Commission decides whether to make them final.

Where: CMG is headquartered in Atlanta, Georgia. MindSift operates from Nashua, New Hampshire. 1010 Digital Works is based in Mequon, Wisconsin. The FTC complaints were filed before the Federal Trade Commission in Washington, D.C.

Why: The companies falsely represented that Active Listening collected and used voice data from consumers' smart devices, that consumers had consented to this collection, and that the service could accurately target ads within specific local geographic areas. None of these claims were accurate. The FTC found this conduct violated Section 5(a) of the Federal Trade Commission Act, which prohibits deceptive acts or practices in or affecting commerce.

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