An investigation reveals that Meta, despite its efforts, profits significantly from fraudulent ads, indicating a business model that prioritizes revenue over user safety, a problem mirrored across the wider digital advertising industry.
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Have you ever seen an online ad that
felt too good to be true? Clothes from a
famous big brand at half the price, a
celebrity promoting a new investment
scheme, or a website promising to double
your money overnight.
It looks tempting, slick, convincing,
sometimes even trustworthy. I hope you
know by now that most of these are scam ads.
ads.
But what if I told you that these scam
ads are not some random mistakes? What
if they're part of a much bigger
business? One that's making tech
companies billions of dollars in
revenue. Well, that's exactly what an
investigation has revealed. Meta, the
company behind Facebook, Instagram, and
WhatsApp, has been making huge profits
from fraudulent ads.
How much money are we talking about? 10%
of Meta's revenue in 2024. That's about
$16 billion. That's the kind of money
we're talking about here.
This is according to the company's own
projection that 10% of its revenue last
year would come from fraudulent ads.
These are ads for scams and banned
goods, stuff like fake online shops,
illegal casinos, and even unapproved
medical products. Some of them use the
faces of celebrities. Some use real
brand names. And these posts are getting
wide reach. Again, this is from Meta's
own data. It said that users were seeing
15 billion high-risk scam ads every
single day. 15 billion every day. How
does something like that even happen?
Let me break it down for you. Meta uses
automated systems to flag scammers, but
it only bans them when it is 95% sure
that they're committing fraud. If the
system is less sure of fraud, Meta lets
them run the ad, but it charges the
advertisers more
for what could potentially be a scam.
This policy is called a penalty bid.
It's supposed to discourage the
scammers, but that's a sorry excuse. The
fact is Meta is turning a blind eye to
scams to make more money off them, and
it has become their business model. The
investigation also reveals that Meta
safety had revenue limits, meaning they
put company revenue over user safety.
I'll tell you how Meta would take down
fraudulent ads, but only up to a point.
It could cost the company not more than
0.15% of its total revenue. That's about
$135 million. So any revenue loss beyond
this figure was not allowed even if it
meant running scams.
Even when fraud was found, there was a
cap on how much Meta could lose while
fixing it.
The impact of this was real and serious.
A Facebook account in Canada was hacked,
for example. Scammers used it to promote
a fake cryptocurrency offer. Friends of
the account owner lost thousands of
dollars. It took weeks for Meta to take
that account down.
Besides, Meta's own research showed that
its platforms were involved in about a
third of all successful scams in the
United States. Meta platforms,
these are all glaring lapses.
Do you know what Meta's response to this
investigation is?
>> They've dismissed it. The company says
10 the 10% figure is rough and overly
inclusive. It claims that many of those
ads were legitimate. Meta also says it
has reduced user reports of scam ads by 58%.
58%.
Needless to say, it's far from enough.
Also, this is not just a Meta problem.
It's an industrywide crisis. The world
is losing billions to ad fraud. One
estimate says global losses will nearly
double in the next few years from 88
billion in 2023 to $172 billion in 2028.
That's a growth rate of about 14% every
year. And it's not just about money. Ad
fraud undermines the entire digital
economy. On average, one in four ad
clicks are fraudulent.
And that has consequences.
You see, when every fourth click is
fake, marketers think that their
campaigns are working when they are in
fact not working.
Advertising money is wasted. Brands lose
trust and users get flooded with more
misleading content.
What's making this worse is technology
itself. Generative AI can produce very
convincing fake ad content. Deep fake
like endorsements are now a real risk.
AI bots also simulate human behavior at
scale that hits campaigns and budgets directly.
directly.
And our regulators are starting to
respond. The European Union's Digital
Services Act demands ad transparency.
Other countries are drawing up similar
rules. Meanwhile, tech companies say
that they are addressing it. Google says
it has removed 1 it has removed in fact
5.1 billion ads last year. It blocked
415 million scam related ads.
But as you can see in the case of
Facebook, it doesn't suit tech giants to
fix this.
They will need regulatory pressure and push,
push,
but regulators are always playing
catch-up. In the meantime, what can you,
the consumer, do?
Verify before you buy, be skeptical, and
report suspicious ads. Because in the
digital world, every click has a price.
And your best defense is staying informed.
informed.
>> Want the facts,
>> the latest developments,
>> news that gets straight to the point?
Well, we've got all three just for you.
This is First Post Live, a brand new
show. Your window into what really matters.
matters.
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