Australia’s consumer watchdog is taking Meta to court, alleging the company “aided and abetted” celebrity scam ads on Facebook that have cost some Australians hundreds of thousands of dollars.
The ads, which include the promotion of investment in cryptocurrency, have plagued the platform since 2020. Each ad depicts an image of a prominent Australian such as David Koch, Dick Smith or Andrew Forrest, claiming to have made it big with the investments in a fake news article that directs people to the scam investment website.
A previous Guardian Australia investigation found the sites were registered to addresses in Russia, with others in Ukraine.
Meta has struggled to keep the ads off its site, with the scammers frequently changing the URLs for the scam sites and the text of the ads to escape Facebook’s ad filtering.
The Australian Competition and Consumer Commission said Meta has not done enough to stop these ads. It has taken the company to the federal court for engaging in allegedly false, misleading or deceptive conduct in publishing the ads, and aiding and abetting the false conduct by the advertisers.
“The essence of our case is that Meta is responsible for these ads that it publishes on its platform,” the ACCC chair, Rod Sims, said.
“It is a key part of Meta’s business to enable advertisers to target users who are most likely to click on the link in an ad to visit the ad’s landing page, using Facebook algorithms. Those visits to landing pages from ads generate substantial revenue for Facebook.”
Smith, who had complained to Meta about the ads in 2020, welcomed the legal action.
“I just don’t have the deep pockets. I knew that if I tried to take Facebook on, basically that I would just end up spending a fortune and they would just throw money at it,” he told Guardian Australia.
“I totally support [the ACCC action] and I’m hoping that [it] is going to get Facebook to change its checking procedure so they don’t just run scam ads without any checking.”
The ACCC says Meta did not take sufficient steps to stop the issue, despite Smith, Forrest and others featured in the ads complaining about it.
“We allege that the technology of Meta enabled these ads to be targeted to users most likely to engage with the ads, that Meta assured its users it would detect and prevent spam and promote safety on Facebook, but it failed to prevent the publication of other similar celebrity endorsement cryptocurrency scam ads on its pages or warn users,” Sims 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.”
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The ACCC will seek injunctions, penalties and costs among the orders sought.
A spokesperson for Meta said the company intended to defend the proceedings but could not comment on the specific claims while it was before the court.
“We don’t want ads seeking to scam people out of money or mislead people on Facebook – they violate our policies and 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 systems. We’ve cooperated with the ACCC’s investigation into this matter to date.”
The company removed 1.7bn fake accounts and 1.2bn pieces of spam content between October to December last year – more than 99.9% and 99.6% respectively of each were removed before they were reported.
Meta also took legal action in 2020 against LeadCloak, a company providing software to get around Facebook’s ad detection system.
The scam has likely raked in millions from unsuspecting people. One 77-year-old grandmother lost $80,000 in the investment, while the ACCC has said another person lost $650,000 through the scam.
Smith said Facebook should be required to have human intervention to check ads before they run, and said his image was still being used in the scam ads as recently as a month ago.
Forrest has launched criminal proceedings against Meta over the ads in Australia as well as a civil suit in the United States.
