Australian ACCC sues Meta over scam crypto ads

By Raffaele Redi

Meta allegedly published scam crypto ads featuring spurious celebrity endorsements

Website of The Australian Competition and Consumer Commission (ACCC)                                 
The ACCC has instituted Federal Court proceedings against Meta – Photo: Shutterstock

The Australian Competition and Consumer Commission (ACCC) has instituted Federal Court proceedings against Meta, alleging that the social media giant engaged in false, misleading or deceptive conduct by publishing scam crypto advertisements featuring celebrities.

According to the Commission, Facebook owner Meta Platforms, Inc and Meta Platforms Ireland Limited could also have turned a blind eye to scam ads presenting prominent Australian public figures, although some of them complained about them.

“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,” Sims said.

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

Facebook allegedly failing to detect scams

The ACCC also 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.

According to the authority, the scam “celebrity endorsement” 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. Meta failed to prevent the publication of other similar celebrity endorsement cryptocurrency scam ads on its pages or warn users,” Sims said. “Apart from resulting in untold losses to consumers, these ads also damage the reputation of the public figures falsely associated with the ads.” 

As the ACCC reported, in November 2019, former Fortescue Metals Group CEO Andrew Forrest, a prominent Australian businessman, 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.

Other people featured in the ads included businessman Dick Smith, TV presenter David Koch and former NSW premier Mike Baird, none of whom had approved or endorsed the ads.

Meta’s response

A spokesperson for Meta told the media: “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. We will review the recent filing by the ACCC and intend to defend the proceedings. We are unable to further comment on the detail of the case as it is before the Federal Court,” the Meta spokesperson concluded.

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$115bn.

Meanwhile, data available on the AAAC’s Scamwatch website show that in 2021, consumers reported losses of $99m to cryptocurrency investment scams.

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