From Teflpedia

Mishearing (/ˌmɪsˈhɪərɪŋ(g)/) is misunderstanding that occurs during listening when a listener does not hear a message, but instead interprets what they hear as a different message.

We generally use the term "mishearing" as opposed to "mislistening", which would perhaps be more logical since the term refers to listening rather than hearing.

This can be due to hearing impairment; context being insufficient. It can also be due to the medium, e.g. static on radio.

Mishearing in safety-critical contexts can be reduced by making sure people follow protocol, e.g. using fixed phrases and the NATO phonetic alphabet.

As a verb, "mishear" can be used as a compound verb that is irregular because it follows hear, i.e. hear+hears+hearing+heard+heard.

Contrast misreading.