More dark clouds are gathering above Meta as the competition and consumer watchdog in Australia is taking the social media giant to court for endorsing scam celebrity crypto ads.
Meta Stands to Gain Financially
The Australian Competition and Consumer Commission (ACCC) pointed the finger at Meta Platforms, formerly known as Facebook, in an announcement today, claiming the company “aided and abetted or was knowingly concerned in false or misleading conduct and representations by the advertisers.”
For its engagement in unapproved or scam ads featuring some prominent public figures in Australia, including entrepreneur Dick Smith, TV host David Koch and the former premier in New South Wales Mike Baird, the ACCC is taking Meta to the Federal Court, alleging “false, misleading or deceptive conduct.”
“Meta is responsible for these ads that it publishes on its platform,” said ACCC Chair Rod Sims in the announcement, stating that the social media did not remove these ads as it is “a key part of Meta’s business to enable advertisers to target users who are most likely to click on the link in an ad to visit the ad’s landing page, using Facebook algorithms.”
“Those visits to landing pages from ads generate substantial revenue for Facebook.”
Rod Sims, Chair, ACCC
The ACCC outlined that Meta users were redirected via dubious links embedded in the ads towards a fake media article in which a prominent public figure was quoted as supposedly endorsing a certain cryptocurrency or a money-making scheme.
“Users were then invited to sign up and were subsequently contacted by scammers who used high-pressure tactics, such as repeated phone calls, to convince users to deposit funds into the fake schemes.”
Rod Sims, Chair, ACCC
Disgraceful Failure to Act
ACCC’s Chair then noted that one consumer was scammed into participating in one of those schemes that had been advertised as an investment opportunity as a result of which the Meta user lost more than AU$650,000 ($481,000).
“This is disgraceful,” Sims concluded.
The ACCC is seeking “declarations, injunctions, penalties, costs and other orders” against Meta for its breach of the Australian Consumer Law (ACL) and the Australian Securities and Investments Commission (ASIC) Act.
ACCC’s legal action against Meta followed just over a month after Australian billionaire Andrew “Twiggy” Forrest took the social media to court for publishing scam cryptocurrency ads that use his name to defraud consumers.
Last month, the Banking and Insurance Regulatory Commission in China warned the public of the potential risks of illegal fundraising in the name of the metaverse. According to the regulator, fake metaverse projects are presented to the public as a small investment high reward investment scheme by fraudsters.
The legal action against Meta is the latest of the issues the recently rebranded social media is facing. In its recently released full year report, Meta revealed a surprising drop in the number of its active users, the first in its history.