Meta under fire: Fraudulent ads raise about $7bn annually
The social media giant Meta is coming under fire for profiting from a flood of fraudulent ads, despite internal forecasts showing that scams and banned goods could account for 10% of revenue in 2024—a staggering $16 billion (€13.9 billion). According to Reuters, Meta platforms’ Facebook, WhatsApp, Instagram and Threads, display around 15 billion fraudulent ads every day, generating about $7 billion (€6.1 billion) in annual revenue.
Although Meta has recognised the presence of suspicious advertisers – flagged by internal warning systems – these are often not banned, unless automated systems predict fraudulent activity with 95% certainty. According to internal documents, suspected scammers are charged higher ad rates as a deterrent. This approach prioritises protecting revenue over user safety.
Meta’s ad personalisation system exacerbates the issue by showing users who click on fraudulent ads even more similar content, potentially trapping them in a cycle of deception.
The revelations highlight the lack of legal oversight in the advertising industry and Meta’s willingness to profit from sources it suspects are fraudulent. Experts say that tolerating such practices undermines trust and accountability in online platforms.
Meta spokesperson Andy Stone insisted that internal estimates of revenue from scams were “rough and over-inclusive,” ultimately resulting in a lower figure than initially projected. He emphasised Meta’s commitment to fighting fraud, citing a 58% reduction in user reports of fraudulent ads worldwide over the past 18 months.
However, internal documents painted a more complex picture. While Meta acknowledged the role its platforms play as a pillar of the global fraud economy, it also revealed ongoing efforts to reduce fraudulent ads, aiming for a 50% decrease in some markets by 2025. Pressure from regulators on Meta is mounting, as authorities worldwide scrutinise the company’s practices. The Securities & Exchange Commission in the US is investigating Meta for hosting ads that promote financial scams, while regulators in the UK highlight the significant involvement of Meta’s platforms in losses due to payment fraud.
Meta has struggled with the costs of stricter enforcement against ad fraud and admits that significant crackdowns could impact commercial forecasts. While the company said it aims to reduce illegal revenue streams, it recognised that potential fines from regulators could reach as much as $1 billion (€870 million) – an amount still significantly lower than the annual revenue from fraudulent ads.
Internal documents also revealed that Meta preferred to respond to impending regulations rather than proactively address the problem. Restrictions on revenue loss further demonstrated this approach, limiting the impact of efforts to remove fraudulent ads to just 0.15% of total revenue by early 2025.
Despite internal strategies to reduce fraudulent ads, Meta’s platforms remain vulnerable to a variety of scams, including impersonation schemes targeting advertisers and public figures, sextortion, and fake accounts posing as celebrities or major brands.
Meta said that in recent years, it has significantly increased the number of staff dealing with fraudulent ads, despite ongoing layoffs affecting security teams. The company acknowledges that it is unable to handle most user reports of scams, aiming to reduce the rejection rate of valid reports from 96% to 75%.
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