The Australian Competition and Consumer Commission (ACCC) is suing Facebook parent company Meta over “disgraceful” scam ads that proliferated on the social media platform.
Featuring prominent Australians like TV host David Koch or businessman Dick Smith, the ads promoted cryptocurrency and investment schemes by linking to a fake news article on spoofed websites designed to look like legitimate news sources.
Scammers have been creating and placing these ads using Facebook’s automated advertising system.
The ACCC alleges that this technology “enabled these ads to be targeted to users most likely to engage with the ads” and that the social media giant “failed to prevent the publication” of fake celebrity-endorsed ads despite being aware they were a problem.
On his last day in the job as ACCC chair, Rod Sims described one instance in which a person “lost more than $650,000 due to one of these scams being falsely advertised as an investment opportunity on Facebook”.
“This is disgraceful,” he said. “Meta should have been doing more to detect and then remove false or misleading ads on Facebook, to prevent consumers from falling victim to ruthless scammers.”
Meta has been complicit in these scammers’ actions, the ACCC alleges, which has consequences for both the Australians who are deceived and lose money through the ads but also the celebrities who feature in them.
Advertising is Meta’s primary source of revenue, accounting for US$115 million out of its US$118 million total revenue in 2021.
But the scalable automated advertising processes that make Meta profitable are also the cause of scourges like investment scam ads.
A Meta spokesperson told Information Age the company doesn’t want these scam ads either and that they “are not good for our community”.
“We use technology to detect and block scam ads and work to get ahead of scammers’ attempts to evade our detection,” the spokesperson said.
“We’ve cooperated with the ACCC’s investigation into this matter to date. We will review the recent filing by the ACCC and intend to defend the proceedings.”
Clearly Meta’s own systems have not been up to scratch given the ACCC’s action is just the latest attempt to bring the social giant to heel.
Last month, mining magnate Andrew ‘Twiggy’ Forrest launched a separate claim against Facebook – which is owned by Meta – because his likeness was being used in scam ads that appeared on the platform.
At the time, Forrest said his lawsuit was taken on behalf of “everyday Australians” who had fallen foul to scammers taking advantage of Facebook’s lack of oversight.
“I want social media companies to use much more of their vast resources and billions of dollars in annual revenue to protect vulnerable people – the people who are targeted and fall victim to these horrible scams with their hard-earned savings,” he said.
For its part, Facebook tries to delete fake accounts that can be used to create malicious ads and claims to have gotten rid of 6.7 billion fake accounts last year alone.
The ACCC today announced new chair Gina Cass-Gottlieb had commenced her term. The competition lawyer becomes the first female chair since the ACCC was established as an independent statutory authority in 1995.