Facebook finds itself again at the center of a controversy.
It's as if the social media giant, which changed its name last October to become Meta Platforms (FB), was struggling to manage its practices.
Australia’s consumer watchdog (ACCC) has decided to sue Meta for allegedly “aided and abetted” celebrity scam ads on Facebook that have cost some Australians hundreds of thousands of dollars."
Meta "engaged in false, misleading or deceptive conduct by publishing scam advertisements featuring prominent Australian public figures," the regulator argued in a press release.
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).
False Ads Associated with Celebrities
It is also alleged that Meta aided and abetted or was knowingly concerned in false or misleading conduct and representations by the advertisers.
"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," ACCC said.
Adding: "The schemes were in fact scams, and the people featured in the ads had never approved or endorsed them>
According to the regulator, 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.”
“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.
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.
The regulator is seeking penalties, costs and other orders.
Contacted by TheStreet, Meta did not respond. But according to statements made to other news outlets, Meta said it will defend the proceedings.
Facebook Accused of 'Malicious Technique'
“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," a spokesperson told The Guardian.
"We’ve cooperated with the ACCC’s investigation into this matter to date.”
Meta removed 1.7 billion fake accounts and 1.2 billion pieces of spam content between October to December last year – more than 99.9% and 99.6% respectively of each were disconnected before they were reported.
Mark Zuckerberg's company filed a lawsuit in California in 2020 against Basant Gajjar.
"Using the name 'LeadCloak,' Gajjar violated Facebook terms and policies by providing cloaking software and services designed to circumvent automated ad review systems, and ultimately run deceptive ads on Facebook and Instagram," Facebook said in April 2020.
The company explained that cloaking is a malicious technique that impairs ad review systems by concealing the nature of the website linked to an ad. When ads are cloaked, a company’s ad review system may see a website showing an innocuous product such as a sweater, but a user will see a different website, promoting deceptive products and services which, in many cases, are not allowed.
"In this case, Leadcloak’s software was used to conceal websites featuring scams related to COVID-19, cryptocurrency, pharmaceuticals, diet pills, and fake news pages. Some of these cloaked websites also included images of celebrities," said at the time Jessica Romero, Facebook's director of platform enforcement and litigation in a blog post.
