Consumer watchdog takes Meta to court over crypto ‘scams’

Joseph Brookes
Senior Reporter

Australia’s competition and consumer regulator is taking technology giant Meta to court over allegedly misleading cryptocurrency “scam” advertisements that ran on its platforms.

The ads included images of high-profile Australians like businessman Dick Smith, TV presenter David Koch and former New South Wales premier Mike Baird, and misled Facebook users into providing their contact details.

Scammers used the information to target users directly, in some cases extracting large amounts of money, according to the regulator.

“In one shocking instance, we are aware of a consumer who lost more than $650,000 due to one of these scams being falsely advertised as an investment opportunity on Facebook. This is disgraceful,” Australian Competition and Consumer Commission (ACCC) chair Rod Sims said.

Meta said it is reviewing the court filings and intends to defend the proceedings.

Mark Zuckerberg
Meta founder and chief executive Mark Zuckerberg

On Friday the ACCC announced it has instituted Federal Court proceedings against Facebook owner Meta Platforms, Inc. and Meta Platforms Ireland Limited. The regulator is alleging the companies engaged in false and misleading advertising by publishing “scam advertisements” featuring prominent Australian public figures.

The case is separate from mining magnate Andrew Forrest’s recent legal action against Meta platforms, where he is also suing Meta over its use of his image in cryptocurrency scam ads.

The regulator will allege Meta was aware of the scams but failed to properly address them, even after several public figures complained.

“The essence of our case is that Meta is responsible for these ads that it publishes on its platform,” ACCC chair Rod Sims said.

“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.”

The ACCC said the advertisements running on Meta’s Facebook platform promoted investment in cryptocurrency or money-making schemes were likely to mislead users into believing the schemes had been endorsed by the Australian public figures featured in the ads.

The regulator named three of the figures on Friday, businessman Dick Smith, TV presenter David Koch and former NSW Premier Mike Baird.

The ads were “scams”, containing links to fake media articles with quotes attributed to the public figures endorsing the crypto and money making schemes. The fake articles asked users to sign up, with scammers then then using the information to contact users with high pressure tactics to convince them to deposit money into the fake schemes, according to the ACCC<

The regulator is alleging the Meta companies’ conduct is a breach of Australian Consumer Law (ACL) or the Australian Securities and Investments Commission Act (ASIC Act). It will seek declarations, injunctions, penalties, costs and other orders.

The ACCC also claims Meta “aided and abetted or was knowingly concerned in false or misleading conduct and representations by the advertisers”.

A Meta company spokesperson said the company had cooperated with the regulator to date and intends to defend itself against the allegations.

“We don’t want ads seeking to scam people out of money or mislead people on Facebook – they violate our policies and are not good for our community. We use technology to detect and block scam ads and  work to get ahead of scammers’ attempts to evade our detection systems,” A Meta spokesperson told InnovationAus.

“We’ve cooperated with the ACCC’s investigation into this matter to date. We will review the recent filing by the ACCC and intend to defend the proceedings. We are unable to comment further on the detail of the case as it is before the Federal Court.”

In a separate case, Australian billionaire Andrew Forrest has launched a criminal case against Facebook, also alleging the company failed to prevent scams ads that used his image, claiming the tech giant had been “criminally reckless”.

While the cases are similar the ACCC said they concern different questions of law.

Do you know more? Contact James Riley via Email.

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