Australia Sues Meta Over Facebook Scam Adverts

Facebook parent Meta Platforms is facing a lawsuit in Australia, after that country’s competition watchdog launched legal proceedings over allegations it published scam adverts.

The Australian Competition & Consumer Commission (ACCC) on Friday announced “Federal Court proceedings” and alleged Meta had “engaged in false, misleading or deceptive conduct by publishing scam advertisements featuring prominent Australian public figures.”

It comes as the UK government in its proposed Online Safety Bill, placed the onus on tech platforms to protect users from fraudulent adverts and scams.

Scam ads lawsuit

The ACCC meanwhile alleges that Meta’s conduct was in breach of the Australian Consumer Law (ACL) or the Australian Securities and Investments Commission Act (ASIC Act).

It is also alleged that Meta aided and abetted, or was knowingly concerned, in false or misleading conduct and representations by the advertisers.

The ACCC alleges the scam ads, which promoted investment in cryptocurrency or money-making schemes, were likely to mislead Facebook users into believing the advertised schemes were associated with well-known people featured in the ads, such as businessman Dick Smith, TV presenter David Koch and former NSW Premier Mike Baird.

The schemes were in fact scams, and the people featured in the ads had never approved or endorsed them.

The ads contained links which took Facebook users to a fake media article that included quotes attributed to the public figure featured in the ad endorsing a cryptocurrency or money-making scheme.

Users were then invited to sign up and were subsequently contacted by scammers who used high pressure tactics, such as repeated phone calls, to convince users to deposit funds into the fake schemes.

“The essence of our case is that Meta is responsible for these ads that it publishes on its platform,” 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.”

Celebrity endorsement

The ACCC alleges that Meta was aware that the celebrity endorsement cryptocurrency scam ads were being displayed on Facebook but did not take sufficient steps to address the issue.

The ACCC alleged that celebrity endorsement cryptocurrency scam ads were still being displayed on Facebook even after public figures around the world had complained that their names and images had been used in similar ads without their consent.

“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 added.

“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,” he said.

“Apart from resulting in untold losses to consumers, these ads also damage the reputation of the public figures falsely associated with the ads. Meta failed to take sufficient steps to stop fake ads featuring public figures, even after those public figures reported to Meta that their name and image were being featured in celebrity endorsement cryptocurrency scam ads,” Sims said.

The ACCC said that in one shocking case, a consumer lost more than $650,000 due to one of these scams being falsely advertised as an investment opportunity on Facebook.

The ACCC is seeking declarations, injunctions, penalties, costs and other orders.

Facebook response

Meta told Reuters any ads that scammed people out of money or misled users violated its policies and the company uses technology to detect and block such posts, adding it had “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,” a Meta spokesperson told Reuters in an emailed statement, declining to comment further as the case was before court.

The Australian scam example mirrors a similar problem in the UK a few years ago.

Martin Lewis, the founder of MoneySavingExpert had sued Facebook in April 2018 after the social networking firm had allegedly refused to stop publishing scam financial adverts that featured his “picture, name and reputation.”

Lewis said he had been fighting with Facebook for over a year before he began the lawsuit to get them to stop publishing adverts for scams, that utilised his name and picture. One lady reportedly lost £100,000 to the scam adverts.

In January 2019 Lewis dropped its High Court lawsuit against Facebook, after the social networking giant agreed to introduce a scam ads reporting button, and make a financial donation.