Facebook acknowledged the transcriptions, which were first reported by Bloomberg, telling the news agency in a statement that they were made with users' permission, but that the practice has nonetheless been stopped.
Shares of Facebook pared gains after the report and were up 1.66 per cent at US$188.44 (S$260.92).
Facebook has long dismissed the rumors that it was listening to users' private conversations in order to target them with ads.
Facebook has tested their transcription tool by having outside contractors listen to audio recordings of their users, US media reported on Tuesday. CEO Mark Zuckerberg denied the idea directly in congressional testimony.
The company also agreed to pay a record US$5 billion (S$6.9 billion) fine last month to settle a US Federal Trade Commission data privacy probe.More news: Serena Williams in Rogers Cup semis
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Facebook says its "systems automatically process content and communications you and others provide to analyse context and what's in them".
Apple and Google have in recent weeks said they've halted the practice, while Amazon gives users the option of blocking the collection of their voice by Alexa, the artificial intelligence driving their Echo voice assistant. That led some of the workers to believe their work was "unethical", especially when some of the conversations included vulgar material.
You're talking about this conspiracy theory that gets passed around that we listen to what's going on on your microphone and use that for ads.
At least one firm reviewing user conversations is TaskUs Inc., a Santa Monica, California-based outsourcing firm with outposts around the world, the people said.
According to the article, Facebook has never informed users that third parties may review their audio.