The Non-Financial Ledger

Small businesses bought “Active Listening” because they were told it would give them a specific competitive advantage: the ability to reach people in their own communities at the exact moment those people were talking about needing what the business sells. That pitch targets the most vulnerable position a small business owner occupies, which is the fear of being invisible in a market shaped by companies with advertising budgets they cannot match.

What they purchased was a list of email addresses. The geographic promise, that these were real customers in their area, was also false. The FTC found that lists generated by the service contained consumers from across the country, with only a fraction located anywhere near the purchasing business. A shop owner in Orlando paid to reach Orlando. They reached strangers nationwide.

Every skeptical customer who asked how the voice surveillance worked received a ghost-written technical response designed to dissolve their doubt. The company produced that script. That is not a passive deception. That is active management of a lie.

Legal Receipts

These are the company’s own words, entered into the federal record.

“Yes, your devices are listening to you.”

• This was a direct claim made to prospective customers. It was false. The FTC established that smart devices did not transmit voice data to the service under any circumstances. The company knew what its service actually was: email list purchasing.
• This statement, and the product name “Active Listening,” were engineered to make customers believe surveillance technology was operating on their behalf.

“Our platform consumes opted-in user behaviors that are unmatched to a user at the time of our acquisition. Our algorithm will use a personal identifier, most commonly an email address to match behaviors generated via Voice from IoT devices, Search, DSP’s, Data Providers, Publishers and predict where they are in the ‘buying funnel’… Voice related behaviors make up 40%-50% of behavior volumes we consume.”

• This text was ghost-written by 1010 Digital specifically to answer skeptical customers. It was not spontaneous reassurance; it was a prepared script for overcoming sales objections about the service’s legality and technical claims.
• The FTC found that no voice data was collected or used at any point. The claim that voice behaviors made up 40 to 50 percent of the data volume was fabricated.
• The phrase “unmatched to a user at the time of our acquisition” was technical-sounding language designed to make email list purchasing sound like sophisticated AI-driven surveillance.

“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.”

• This statement was offered as proof that the service’s voice data collection was legally permissible. The FTC established that this consent argument was irrelevant because the service collected no voice data whatsoever.
• The company was using the existence of buried terms-of-service consent as a shield for a claim that was false at its foundation, meaning no consent was needed because no voice collection was happening.

“All data we sell is sourced exclusively from users who have explicitly opted in to share their data.”

• This statement conflated two unrelated things: the consent practices of data brokers selling email lists, and consent to voice data collection. The service never collected voice data, so no voice data consent existed to point to.
• The FTC found this representation false and misleading, establishing it as a direct violation of Section 5(a) of the FTC Act.

Public Deception

Every material claim the company made about its service was contradicted by what the service actually did.

• Claimed: Smart devices were actively listening to consumer conversations and transmitting voice data to the platform. Reality: No voice data was collected or used. Ever. The FTC’s finding is unambiguous.
• Claimed: Consumers had opted in to voice data collection. Reality: No such consent was obtained. The company pointed to buried device terms of service to simulate the appearance of a consent framework for a collection that was not occurring.
• Claimed: Advertisers could target potential customers within a specific geographic radius, for example within ten miles of a business location. Reality: Lists were drawn from consumers across the country. Only a fraction of names on any given list were located near the purchasing business.
• Claimed: The service used real-time voice and keyword technology to identify buyers at the moment of pre-purchase intent. Reality: The service was consumer email list purchasing from data brokers, an established and generic industry practice with no voice or real-time component.

Regulatory Gray Zones

The company built its legal defense around a feature of American terms-of-service law: buried consent language in app and device agreements that users must accept before using a product.

• 1010 Digital argued that consumer consent to voice access was already embedded in the terms-of-service agreements for apps and devices. The argument was: because those agreements technically authorize microphone access, any downstream use of that access is covered. The FTC’s finding demolished this argument because the service collected no voice data, making the consent question irrelevant at its foundation.
• The strategy of pointing to buried ToS consent is a known tactic in the data industry. It converts a consumer’s inability to use a product without accepting blanket permissions into a legal shield for data practices the consumer has never meaningfully authorized. The company attempted to import that framework into a context where the underlying data collection did not even exist.

Profit-Maximization at All Costs

The financial engine of the scheme was straightforward: buy generic email lists cheaply from data brokers, wrap them in surveillance-technology branding, and sell them at a significant markup.

• The FTC’s complaint establishes that 1010 Digital “resold these lists at a significant markup over the cost of the data.” The company’s entire margin depended on the false narrative of voice surveillance technology. Without the technology claim, it was selling a commodity product at commodity prices.
• The deception was distributed through two channels simultaneously: direct sales to small businesses, and white-label resale through CMG (Cox Media Group), a large marketing firm that sold the fake service to its own client base. This multiplied the reach of the fraud without multiplying the cost of running it.
• The company produced ghost-written scripts for CMG to use when customers expressed doubt. Investing resources in manufacturing false reassurances, rather than developing actual technology, is a documented choice to sustain deception over product development.

Legal Minimalism: The Letter but Not the Spirit

The company borrowed the consent framework of legitimate data practices and applied it to a product that did not operate as described, using the vocabulary of compliance to perform legitimacy.

• Consumer data privacy law requires consent for the collection of sensitive data, including voice data. 1010 Digital cited the consent mechanisms of third-party apps and device makers as its consent documentation, implying it operated within an established legal framework. The FTC established that this framework was invoked for data that was never collected, making the consent claim simultaneously technically referenced and practically meaningless.
• The service name “Active Listening” and the marketing language “Where do you want us to listen?” were constructed to perform the appearance of a technically sophisticated, consent-grounded service. The FTC’s Count II specifically charges that furnishing these materials to CMG constituted providing the means and instrumentalities for deception, recognizing that the performance of compliance can itself be a deceptive act.

Supply Chain Complicity

The deception did not travel in one direction. It was structured as a supply chain, with 1010 Digital as the manufacturer of both the false product and the false marketing, and CMG as the distributor absorbing and propagating the lie to the end customer.

• 1010 Digital operated in concert with MindSift LLC, which participated in the advertising and marketing of Active Listening to small businesses. The FTC complaint establishes MindSift as a co-actor in the distribution of the fraudulent service.
• CMG (Cox Media Group) sold Active Listening on a white-label basis to its own small business customer base. CMG received marketing copy, sales pitches, and responses to skeptical customer questions directly from 1010 Digital. The small businesses at the end of the chain had no way to know the product they were evaluating had been fabricated upstream.
• The FTC’s Count II charge, providing “means and instrumentalities” for deception, specifically addresses the supply chain structure: 1010 Digital supplied the tools of the fraud; CMG applied them. Both tiers of this chain were material to how the harm reached end customers.
• Data brokers formed the upstream tier. 1010 Digital purchased standard email lists and rebranded them as voice-intelligence outputs. The brokers sold a commodity; 1010 Digital sold a fiction built on top of it.

Societal Impact Mapping

Economic Inequality

Small businesses operate on thin margins and treat every marketing dollar as a decision with real consequences. This scheme targeted that vulnerability precisely.

• Small businesses were sold a premium product at a markup over commodity email list pricing, with no premium capability delivered. Every dollar paid above the underlying data broker cost was extracted through fabrication.
• The geographic targeting promise was central to the economic proposition: local businesses paid to reach local customers. The FTC found that the lists were national in scope, making the product economically useless for the localized customer acquisition the businesses were purchasing.
• CMG’s small business clients had no independent way to verify the service’s technical claims. They depended on a trusted marketing partner (CMG) who was itself operating from scripts manufactured by the fraudulent upstream vendor.

Public Health of Privacy

The scheme did not merely sell a fake service. It sold a false model of how surveillance capitalism works, and in doing so, normalized the idea that device microphones are already harvesting private conversations for commercial use.

• The company’s marketing asserted as fact that smart devices were listening to private conversations and feeding that data into advertising systems. That claim was false, but its public circulation reinforces the most paranoid and disempowering version of what digital privacy means: that surveillance is already everywhere and already consented to.
• The buried-terms-of-service consent argument, used as a legal shield, treats the standard practice of ignoring app permissions as meaningful authorization for any data use a company might describe. Normalizing that framework erodes the practical meaning of informed consent in digital contexts.

Who Pays? Following the Cost

The financial harm moved in one direction: from the corporation outward to small business owners who received nothing of value in return for their payment.

• Small business customers paid a price inflated above the underlying commodity cost of the email lists. The FTC’s complaint confirms the service was “resold at a significant markup.” Those customers received geographically useless lists and no voice intelligence of any kind.
• CMG’s own small business customers were downstream of CMG’s purchase of the white-label product. They were harmed twice: by the original false representation and by trusting a marketing firm that was itself operating from fabricated technical descriptions.
• The $25,000 fine paid by 1010 Digital goes to the Commission and may be used for consumer redress. The Decision and Order acknowledges that direct redress may be “wholly or partially impracticable,” meaning the businesses that paid the markup may see none of the penalty money.

The Settlement Isn’t Justice

A $25,000 fine closes a case in which a company sold a nonexistent technology at a significant markup through two distribution channels to an undisclosed number of small business customers.

• The consent order states that 1010 Digital “neither admits nor denies any of the allegations in the Complaint, except as specifically stated in this Decision and Order.” No admission of wrongdoing was required. The company can describe this as a regulatory matter it resolved without conceding it did anything wrong.
• The source documents do not disclose the total revenue generated by Active Listening sales. Without that figure, the relationship between the fine and the profit from the misconduct cannot be calculated. What can be said: the service ran from 2023 through mid-2024, was sold through two channels (direct and CMG white-label), and was priced above the cost of the underlying commodity lists. A $25,000 ceiling on liability for any duration of that operation is not structured to recover what was extracted.
• The 20-year conduct order restricts future misrepresentations but does not require the company to notify or compensate the businesses that purchased the fake service. The Order requires 1010 Digital to provide customer information to the Commission to “enable” redress, while acknowledging redress may be impracticable.

This Is the System Working as Intended

The structure of this enforcement outcome reflects how consumer protection law currently handles small-scale technology fraud: the penalty is sized to the defendant’s apparent capacity, not to the harm caused or the deterrence required.

• The FTC’s enforcement here produced a consent order with a $25,000 fine and no admission of wrongdoing. The structural result is that any company running a similar operation knows in advance that the ceiling on its exposure, if caught, is a fine commensurate with a small LLC’s liquid assets, not with the revenue generated by the fraud.
• The white-label distribution structure meant CMG amplified the fraud’s reach to CMG’s own customer base. The FTC’s Count II charge addresses 1010 Digital’s role in furnishing deceptive materials. The complaint does not charge CMG. A company that distributes a product it did not technically manufacture retains legal insulation even when it is the final interface through which customers are deceived.
• The buried-ToS consent framework used as a defense in this case is not unique to 1010 Digital. It is standard operating procedure across the data industry. An enforcement action that addresses the specific false application of that framework, without addressing the framework’s broader use, leaves the infrastructure of the underlying problem intact.

What a Legitimate Fix Looks Like

This case documents three specific structural failures: the liability gap between manufacturers and distributors of deceptive marketing products; the absence of a meaningful penalty floor for technology fraud targeting small businesses; and the weaponization of buried terms-of-service consent as a compliance shield.

What Now?

The company responsible is 1010 Digital Works LLC, a single-member LLC controlled by its sole owner, Dmitriy Shteynbuk, operating out of Mequon, Wisconsin. The case is now a matter of public federal record.

• File a complaint: If your small business purchased Active Listening or a similar service from CMG or any other reseller of this product, file a complaint with the FTC at reportfraud.ftc.gov. The Commission is required to consider this for consumer redress under the current order.
• Watch these agencies: The FTC Bureau of Consumer Protection and the FTC’s Division of Advertising Practices are the enforcement bodies responsible for cases like this. Track their public docket at ftc.gov/legal-library/browse/cases-proceedings.
• Small business advocacy: Contact your local Small Business Development Center (SBDC) or SCORE chapter. These organizations can help small businesses evaluate marketing vendor claims and flag technically implausible service descriptions before purchase.
• Demand distributor accountability: If you are a CMG customer who purchased this service, CMG received and distributed materials it knew were prepared by a third party making technology claims. Ask CMG in writing what due diligence it conducted before reselling this product to you.