Leaked report reveals how phones secretly listen to your conversations

What was once thought to be a myth and dismissed by major tech companies has now been confirmed as a multi-billion dollar industry.

Experts have now revealed how eavesdropping on conversations through smart devices is being used to gather data and sell it to advertisers.

Earlier this week, a leaked document from a top marketing firm seemed to confirm that companies use microphones on smart devices to listen in before passing the data on to advertisers.

"You can be talking to one of your friends about going on a vacation to Portugal through a phone call, and then a day later or that same day, what do you see? An advertisement for a trip," data security expert Andy LoCascio told DailyMail.com.

The leak came from a presentation by CMG, a marketing partner of companies like Facebook, Amazon, and Google.

The presentation, which appears to have been created for potential clients, detailed CMG's "Active-Listening" software, which gathers information from users by listening to their conversations.

According to LoCascio, "Active-Listening software can be enabled through any app on an Android or iPhone, and other devices like smart home assistants can listen in too."

These devices are not just listening when you're using the microphone intentionally; they are active almost all the time.

"For most devices, there is no point when the microphone is inactive. It is nearly always on when Siri or any other voice-activated assistant is present," LoCascio explained.

Often, apps gain permission to use your microphone via a clause "buried in the long list of permissions you agree to when installing a new app," LoCascio added.

"The issue is, the form of consent is an all-or-nothing Faustian bargain," said data privacy consultant Sharon Polsky.

"So many websites say 'we collect information from you and about you. If you use our website, you've consented to everything that we do.' You have no way of opting out," she added.

LoCascio explained that CMG and other companies can do this even in states with wiretapping laws, such as California, which generally require a person’s knowledge before recording them.

"To be perfectly clear, there are no laws about this. If we give somebody permission to use the microphone on our device, and we accept all the other terms of service that none of us ever read, they can certainly use it," LoCascio said.

Polsky added that this lack of regulatory protection has "created an entire data broker industry that's now worth billions."