Meta reportedly allowed thousands of bogus ads to run on its platforms while refusing to crack down on alleged cases of fraud to avoid losing ad revenue, according to a bombshell report.
The Facebook and Instagram parent accounted for nearly half of all scam complaints tied to Zelle transactions reported by JPMorgan Chase between mid-2023 and mid-2024, according to the expose Friday by the Wall Street Journal.
Other lenders that use the peer-to-peer payment app also have received high amounts of fraud claims linked to Meta, people familiar with the matter told the Journal, which spoke to former and current staffers, regulators and banks, and reviewed internal Meta documents.
Meta’s platforms — used by more than three billion people daily — have long faced issues with fraud. But the problem has reportedly grown in scale in recent years, fueled by the rise of cryptocurrency schemes, AI-generated content and sprawling criminal operations based in Southeast Asia.
One reported scam involved a barrage of deceptive ads falsely tied to Edgar Guzman, who runs a legitimate wholesale business outside Atlanta.
Over the course of a year, more than 4,400 different Facebook and Instagram ads used Guzman’s warehouse address to promote steep discounts on bulk merchandise — including pallets of power tools for $29 and boxes of returned Amazon products starting at just $1.
“What sucks is we have to break it to people that they’ve been scammed — we don’t even do online sales,” Guzman told the Journal, adding that the fraudulent ads have damaged his company’s reputation through negative reviews.
Another nefarious scheme capitalized on the trusted image of global food giant McCormick & Co, the Journal reported.
Facebook and Instagram users were targeted with bogus ads promising a free spice rack and assortment of products from the brand, requiring only a $9.99 shipping fee. The scam lured victims to a site designed to mimic McCormick’s official website, complete with a fake survey and prize game.
After submitting their credit card information, victims were charged for multiple fraudulent purchases totaling hundreds of dollars.
“If their revenue is coming from fraud, what is their incentive to protect people?” Marah Johnson, a 58-year-old artist from Orange County, Calif., who fell for the scam, told the Journal.
“It feels like Meta is helping the scammers out.”
A third scheme thriving on Meta’s platforms involves the sale of nonexistent puppies.
Although Meta bans peer-to-peer live animal sales outside narrow exceptions, a simple search for “puppies” revealed thousands of questionable ads.
Many of them used stolen images and claimed to be from breeders “near me,” but were traced to sellers operating out of Cameroon.
These listings often lacked any affiliation with verified breeders or rescue organizations, in violation of Meta’s own policies, according to the Journal.
Victims were typically asked to send deposits to secure a pet that never arrived.
The various scams can bilk users out of losses ranging into the hundreds of thousands of dollars, according to the Journal.
“In recent years, the epidemic of scams has grown in scale and complexity, driven by ruthless cross-border criminal networks that operate on a global scale,” a Meta spokesperson told The Post on Friday.
“As this scam activity has become more persistent and sophisticated, so have our efforts.”
But current and former staffers told the the Journal that Meta has been hesitant to impose stricter controls on advertisers and has declined to beef up its anti-fraud enforcement mechanisms.
The company reported a 22% increase in ad revenue last year — bringing it to more than $160 billion.
Facebook and Instagram staffers are instructed to tolerate between eight and 32 fraud “strikes” before banning accounts while scam enforcement overall is deprioritized to avoid losing ad revenue, sources told the Journal.
When Meta employees personally escalated the problem to their superiors, the limit dropped to between four and 16 strikes, according to the Journal.
Meta denied that it has put profits ahead of safety,
“Eighty five percent of ad accounts removed or banned for violating our policies never spent a dollar” and “nearly 70% of ad accounts removed for violating our policies are removed or banned within a week of account creation, many on the very day they’re created,” the spokesperson said.
However, the company’s failure to clamp down on bogus ads has allegedly helped fuel human trafficking-linked scam operations in Southeast Asia, where kidnapped victims are forced to work under threat of “extreme forms of torture and abuse,” the Journal reported.
The Meta spokesperson insisted the company is taking aggressive action against these organized fraud operations — often referred to as “pig butchering.”
“We’re going after the criminal organizations behind ‘pig butchering’ and other schemes, which target people globally through messaging, dating, social media and crypto and other apps to convince them to ‘invest’ under false pretenses,” the rep said.
“This year alone, we’ve taken down over two million accounts linked to scam centers in Myanmar, Laos, Cambodia, the United Arab Emirates and the Philippines.”
The company is experimenting with facial-recognition tools, issuing scam warnings to users and collaborating with financial institutions and other tech companies because “this crime affects many industries and cuts across different parts of society,” the rep added.
Those who have been scammed are unlikely to get a refund from Meta .
In legal filings, the tech titan has contended that it holds no legal responsibility for fraudulent content on its sites — citing the controversial Section 230 of the federal telecommunications law that shields platforms.
In a motion to dismiss a federal lawsuit that accused the company of failing to remove cryptocurrency-related impersonation scams, Meta wrote that “the alleged underenforcement of Meta’s monitoring policies cannot give rise to liability,” and argued it “does not owe a duty to users” when it comes to policing fraud.
[Notigroup Newsroom in collaboration with other media outlets, with information from the following sources]
