Australian watchdog is suing Meta over scam crypto ads

The country is suing Meta over scam adverts for cryptocurrency schemes that falsely claimed to be endorsed by prominent figures.
18 March 2022

After Twitter, Facebook’s Meta prepares for a mass layoff (Photo by Drew Angerer / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)

  • The ads were basically promoting cryptocurrency investments and linked to fake media articles that endorsed the schemes.
  • It even cost an individual more than A$650,000 (US$480,000), according to the watchdog.
  • Meta allegedly was aware of the crypto scam ads but did not take sufficient steps to address the issue.

Just last month, Meta Platforms Inc was hit with criminal charges for the first time ever. An Australian mining magnate accused the social media giant of failing to prevent scam ads using his name and image. This week, for almost the same reason, Meta is under fire with the Australian watchdog over scam crypto advertisements that falsely claimed to be endorsed by prominent figures.

The Australian Competition & Consumer Commission in a statement today said that they have instituted Federal Court proceedings against Facebook owner, alleging that they engaged in false, misleading or deceptive conduct by publishing scam advertisements featuring prominent Australian public figures.

The ACCC claims that the conduct of scam crypto advertisements by Meta was in breach of the Australian Consumer Law (ACL) or the Australian Securities and Investments Commission Act (ASIC Act).  To top it off, the ads promoted crypto investments and linked to fake media articles that endorsed the schemes, the commission said.

“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,” the watchdog said. The individuals featured included businessman Dick Smith, TV presenter David Koch and former NSW Premier Mike Baird–all which had never approved or endorsed them.

Making matters worse, the ACCC claimed that “Meta aided and abetted or was knowingly concerned in false or misleading conduct and representations by the advertisers.” To be precise, 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 ACCC highlighted.

The ads in particular, 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 statement reads.

ACCC’s Chair Rod Sims said the essence of their case is that Meta is responsible for these ads that it publishes on its platform. “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,”

The ACCC is also alleging that Meta’s technology had enabled those ads to be targeted to users most likely to engage with the ads. This is despite Meta assuring its users that it would detect and prevent spam and promote safety on Facebook. “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,” Sims said,

To top it off, he noted that “Meta also 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 crypto scam ads.” The scam even cost a consumer more than US$650,000. “This is disgraceful,” Sims said, adding that the ACCC is seeking declarations, injunctions, penalties, costs and other orders.