Meta, the parent company of Facebook, projected internally in late 2024 that approximately 10% of its yearly revenue, totaling $16 billion, would come from running ads promoting scams and banned products. This revelation is based on confidential company documents recently unearthed by Reuters.
The documents reveal that for a period of at least three years, Meta failed to effectively combat a deluge of deceptive ads on its platforms, exposing billions of users across Facebook, Instagram, and WhatsApp to fraudulent schemes, illegal online gambling, and the sale of prohibited medical items. In a notable statistic, Meta reportedly displayed an estimated 15 billion “higher risk” scam ads daily to users, generating around $7 billion in annual revenue from this category alone.
While Meta’s internal systems flagged suspicious marketers, the company only banned advertisers if there was a 95% certainty of fraudulent activity. Advertisers deemed likely scammers but falling below the 95% threshold faced higher ad rates as a deterrent. Furthermore, users who engaged with scam ads were likely to encounter more of them due to Meta’s ad-personalization strategy.
The disclosed documents, spanning from 2021 to the present year, shed light on Meta’s struggle to quantify and address platform abuse while balancing business interests. Sandeep Abraham, a former Meta safety investigator, criticized Meta’s acceptance of revenue from potentially fraudulent sources, highlighting the lack of regulatory oversight in the advertising industry.
In response, Meta’s spokesperson, Andy Stone, disputed the interpretation of the leaked documents, stating that they presented a skewed view of Meta’s approach to fraud and scams. Stone mentioned that Meta had revised its initial revenue estimate downward and emphasized the company’s commitment to combatting fraud and scams vigorously.
Despite ongoing efforts to reduce scam ads, internal documents indicate that Meta’s platforms have become integral to the global fraud economy. Regulators worldwide are pressuring Meta to enhance user protection from online fraud, with investigations by entities like the SEC into financial scam ads on Meta. The company faces potential penalties of up to $1 billion for non-compliance with regulatory standards.
As Meta grapples with intensifying scrutiny, it is investing heavily in AI and infrastructure while striving to decrease the revenue share derived from scams. Executives have outlined plans to progressively reduce the proportion of revenue linked to scams, with targets set through 2027. Amid these initiatives, Meta confronts challenges in effectively policing fraud, including the underreporting and mismanagement of scam reports by users.
The leaked documents underscore Meta’s intricate battle against fraud on its platforms, revealing the company’s strategies, failures, and ongoing efforts to safeguard users and uphold integrity in its advertising ecosystem.