The UK’s Chartered Trading Standards Institute (CTSI), an influential not-for-profit which supports the UK’s trading standards profession and advocates for consumer protection, has this morning called on the government to take action in response to what it describes as an “epidemic of fraud” on Meta’s platforms.
The issue of scam ads across Meta’s properties gained widespread attention last year as leaked internal documents seen by Reuters revealed the company earned an estimated $16 billion from scam ads. CTSI cited a number of follow-up reports which further highlight the issue, including data from Action Fraud indicating that UK consumers have lost around £39 million from scam ads on Facebook and Instagram combined.
CTSI says that criminal organisations are capitalising on public trust in Meta’s brands, and using it to exploit consumers. “Meta and its platforms, including Facebook, sit at the top of a pyramid of fraudulent adverts which impact the lives of people in the UK and across the world every day,” said John Herriman, chief executive of CTSI. “The profits they make from criminal activities is eye-watering.”
The organisation says the government should begin imposing meaningful penalties on social media platforms which enable scams and fraudulent ads, and that platforms should broadly be held accountable financially. It’s also calling on the government to ensure that social platforms allocate greater resource to preventing and combatting fraudulent advertising, and that platforms should be forced to immediately remove any content which is flagged as fraudulent by CTSI itself, or any other enforcers or regulators.
“The Online Safety Act presents an opportunity for government and regulators to level the playing field for legitimate businesses by taking social media companies to task for their failings to protect their users and to start reversing the record levels of consumer detriment UK consumers are facing,” said Herriman. “It is time that the government picks a side and decides who they are acting on behalf of and put legislation in place to end this menace.”
Lack of ability, or lack of motivation?
While Meta has faced a lot of scrutiny since the Reuters report last year, some reports claim that little has changed in the intervening period. Earlier this year, the UK’s Financial Conduct Authority said it identified over 1,000 ads for risky financial products over a one-week period which were clearly illegal, since the advertisers didn’t have the necessary authorisation from the FCA in order to be allowed to advertise.
Meta maintains that it works quickly to remove fraudulent ads whenever they pop up. But scepticism remains around whether Meta couldn’t be doing more, given its vast resources. Reuters, for example, claims that its tests have shown that Meta moves more quickly in markets where there are greater legal consequences for enabling fraudulent ads.
And it remains a very visible issue for Meta in the most basic sense, since its ads library is publicly accessible. A quick search for banking-related terms this morning surfaced an ad for an AI trading platform featuring fake AI-generated footage of UK chancellor Rachel Reeves and HSBC CEO Georges Elhedery endorsing the product. VideoWeek also saw over 100 ads for a gambling product falsely claiming to have been created by YouTube star KSI, most of which featured fake newspaper coverage, AI-generated images, and AI-generated video (which gave the British star an American accent). Some of these ads gained significant reach, with one clocking up over 450,000 views.
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