Australia’s consumer watchdog is suing Facebook’s parent company, Meta, alleging it failed to take action against scammers on its social media platform.
The Australian Competition and Consumer Commission alleges the company engaged in false, misleading and deceptive conduct by publishing scam advertisements featuring prominent Australians.
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Australian watchdog sues Facebook-owner Meta over scam advertisements
Australia’s competition watchdog filed a lawsuit against Facebook owner Meta Platforms (FB.O) on Friday, alleging the social media giant failed to prevent scammers using its platform to promote fake ads featuring well-known people.
ACCC takes action over alleged misleading conduct by Meta for publishing scam celebrity crypto ads on Facebook [news release]
The ACCC has instituted Federal Court proceedings against Facebook owner Meta Platforms, Inc. and Meta Platforms Ireland Limited (together: Meta) alleging that they engaged in false, misleading or deceptive conduct by publishing scam advertisements featuring prominent Australian public figures.
The ACCC alleges that this 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 that the 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.”
It is alleged 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 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,” Mr 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.”
“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,” Mr Sims said.
Facebook failed to prevent the publication of fake ads even after the celebrities reported similar false, misleading or deceptive ads to Meta.”
“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. This is disgraceful,” Mr Sims said.
The ACCC is seeking declarations, injunctions, penalties, costs and other orders.
What to do if you think you have been scammed
People who think they’ve been scammed should contact their bank or financial institution as soon as possible. They can also contact IDCARE on 1800 595 160 or via www.idcare.org if they suspect they are a victim of identity theft. IDCARE is a free, government funded service that will support individuals through the process.
The ACCC encourages people to report scams on the Scamwatch website, follow @scamwatch_gov(link is external) on Twitter and subscribe to Scamwatch radar alerts.
Note to editors
The Federal Court may consider that the alleged conduct involved financial services, which are excluded from the scope of the ACL and are dealt with under the ASIC Act. ASIC has delegated certain powers and functions to the ACCC for the purposes of commencing and conducting these proceedings.
In November 2019, Andrew Forrest published an open letter to Mark Zuckerberg criticising Facebook for allowing cryptocurrency scam ads using his identity onto the platform. He then commenced criminal proceedings against Meta Platforms in February 2022. While these proceedings concern similar advertisements to those in the ACCC’s case, the ACCC’s case is separate and concerns different questions of law.
The ACCC’s proceedings have been instituted against Meta Platforms, Inc. (formerly Facebook Inc) and Meta Platforms Ireland Limited (formerly Facebook Ireland Limited) (together, Meta Platforms).
Meta Platforms generates the majority of its revenue from selling ads displayed to users on its Facebook and Instagram platforms. In 2021, Meta Platform’s global advertising revenue was US$115 billion.
Scamwatch figures show that in 2021, consumers reported losses of $99 million to cryptocurrency investment scams.