Why We Can’t Rely on Meta to Combat Online Scams Alone

What would prompt a business to curtail a revenue stream known to exploit its customers? Typically, ethical considerations drive companies to safeguard their clientele. However, in the realm of Meta, such incentives appear misaligned. Recent revelations highlight how regulatory support may be the only catalyst for Meta to diminish its substantial earnings from fraudulent activities.

A report by Reuters disclosed that a staggering 10% of Meta’s revenue in 2024 stemmed from advertisements promoting scams and prohibited products. Internal documents indicate that the company has struggled for over three years to effectively identify and eliminate a torrent of deceptive ads, exposing millions of users across Facebook, Instagram, and WhatsApp to fraudulent schemes, illegal gambling sites, and banned medical products.

Meta’s platforms reportedly hosted around 15 billion scam advertisements daily, amassing $7 billion annually. Despite anticipating regulatory fines that could approach $1 billion due to scam ads, these penalties pale in comparison to the revenues generated from such activities, according to Reuters.

It is apparent that Meta is aware of the fraudulent activities proliferating on its platforms but has opted for inaction, recognizing that eliminating these ads would adversely affect its profit margins and possibly lead to a decline in stock value. To mitigate financial ramifications, Meta imposes higher charges on advertisers whose ads are flagged for suspicion, creating a disincentive for fraudsters while benefiting the company. Nevertheless, this approach results in a net gain for Meta.

For years, industry professionals, including fraud investigators, have criticized Meta’s indifferent stance toward online scams. Stakeholders, from financial institutions to fraud prevention experts, have implored Meta to uphold more responsible practices, demanding accountability either through proactive measures or by accepting liability for impacted victims. Reports from JPMorgan Chase have indicated that social media platforms were the origin of a significant fraction of scams, with Meta accounting for nearly half of all reported scams on Zelle between 2023 and 2024. Furthermore, the United Kingdom’s Payment Systems Regulator identified that Meta’s products were linked to 54% of payment-related scam losses in 2023.

Essentially, Meta operates in a regulatory void in the United States, prioritizing profit over user safety. Contrastingly, the company faces stringent anti-scam regulations in nations like the United Kingdom, Australia, and Singapore, where legislative actions have mandated greater accountability.

The U.K.’s Online Safety Act compels Meta to address illegal content, including scams, with potential fines reaching 18 million pounds or 10% of global revenue. Similarly, the European Union’s Digital Services Act demands improved transparency and strict identity verification for advertisers. In 2022, the Australian Competition and Consumer Commission initiated legal action against Meta for violating consumer protections by allowing fraudulent cryptocurrency advertisements, while Singapore established the Online Criminal Harms Act compelling Meta to implement anti-scam measures.

In the U.S., while concrete legislative measures to hold social media companies accountable for scams remain elusive, the government is taking steps to combat fraud at a broader level. The U.S. Attorney for the District of Columbia recently announced the creation of the Scam Center Strike Force, targeting criminal organizations in regions like Cambodia and Laos. However, addressing scams abroad doesn’t completely resolve the issue, as Meta’s platforms serve as the primary conduit for these illicit operations. Tackling criminal networks while allowing social media companies to thrive unregulated reflects a superficial remedy to a more profound issue.

Until U.S. regulators adopt a firm approach akin to their international counterparts, Meta’s business calculus will likely continue to favor fraudulent revenues over genuine user protection, leaving millions of users vulnerable.