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Meta sued for 'aiding and abetting' crypto scammers

Watchdog claims Facebook parent sat on its hands as fake ads fleeced netizens

The Australian Competition & Consumer Commission (ACCC) has filed suit against The Artist Formerly Known As Facebook over its publication of ads allegedly featuring celebrities peddling a supposedly surefire-route to cryptocurrency riches.

The regulator has gone after Meta under Oz consumer law that prohibits false, misleading, or deceptive conduct, and under investment laws.

The ads in question featured celebs, TV hosts, and politicians seemingly hyping up cryptocurrency and other money-making schemes. None of the people depicted had given permission, and the ads were fraudulent, we're told. Those unlucky enough to fall for the fake ads were contacted by scammers that the ACCC claimed "used high pressure tactics, such as repeated phone calls, to convince users to deposit funds into the fake schemes."

The regulator alleges Facebook (as it was then) knew about the situation and was even alerted by some of the public figures falsely depicted as fronting the scheme, but still did not act to stop the ads appearing.

One victim lost AU$650,000 ($480,000) to the scam, the regulator said.

"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," said Rod Sims, chair of the ACCC.

"The essence of our case is that Meta is responsible for these ads that it publishes on its platform," Sims added. "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.

"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."

The regulator also pointed out that the celebs depicted without permission have suffered reputational harm.

The Register understands Meta rejects any allegation it deliberately allowed such ads to appear.

In a statement sent to The Register a company spokesperson declared:

"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 comment further on the detail of the case as it is before the Federal Court."

Meta has been here before. In 2018 UK financial advice website operator Martin Lewis sued over crypto-coin ads that falsely used his likeness. And in August 2021 a class action in the US made very similar allegations to those raised by the ACCC.

Back in Australia, Meta is also fighting mining magnate Andrew Forrest, who launched criminal proceedings against the company in February 2022 over similar ads using his likeness that he first complained about in 2019. That case will reach court in Australia later this month. Forrest has also filed a case in the US.

A quick reminder: Meta claims to be a master of technology and artificial intelligence that makes the world a better place, but that tech has not prevented the rampant spread across its platforms of either scammy crypto-dosh ads or misinformation. And some of the latter has led to genocidal violence. It is also accused of knowingly allowing content that harms some Instagram users, and of failing to act on fake ad rackets that mean advertisers get less coverage than they paid for.

The US giant nonetheless believes it can lead a new age of online collaboration in a "metaverse" that will let us all gather in some kind of cartoon-like immersive environment that improves on today's interactions in a yet-to-be-explained way. ®

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