Facebook is facing a lawsuit from an Australian regulator for allegedly doing little to stop scams from circulating through ads across the social media platform.
On Friday, the Australian Competition and Consumer Commission (ACCC) announced it had initiated federal court proceedings against Facebook’s parent Meta for hosting the scam advertisements.
The ads focused on promoting cryptocurrencies and money-making schemes by featuring endorsements from local celebrities. But according to ACCC, “the schemes were in fact scams, and the people featured in the ads had never approved or endorsed them.”
Clicking on the scam ads would take the user to a fake media article with quotes from the featured celebrity. Users were then invited to sign up for the money-making scheme, resulting in the scammers calling up the victim, and pressuring them into depositing money.
“In one shocking instance, we are aware of a consumer who lost more than $650,000 due to one of these scams being falsely advertised as an investment opportunity on Facebook,” said ACCC Chair Rod Sims in a statement.
The Australian regulator went as far to claim “Meta aided and abetted or was knowingly concerned” about the fraudulent advertising. That’s because the ACCC claims some of the celebrities featured in the scam ads complained to Facebook about the problem, but the social network still failed to stop the fraud.
Meta did not immediately respond to a request for comment. But the company told The Wall Street Journal it plans to defend itself in court. “We don’t want ads seeking to scam people out of money or mislead people on Facebook,“ a Meta spokesperson told The Journal. The company also says its has safeguards in place to stop scams from infiltrating its ad systems.
However, the ACCC alleges Meta’s own systems actually helped the scams, pointing to how Facebook can let advertisers target specific users, based on their interests, demographics and profile information. “We allege that the technology of Meta enabled these ads to be targeted to users most likely to engage with the ads,” Sims said.
The ACCC said it’s “seeking declarations, injunctions, penalties, costs and other orders” from Australia’s federal court in its case against Meta. That means the company could end up paying a major fine and be required to take a stronger stance on suspected ad fraud if it loses the lawsuit.
