Meta has estimated that up to 10% of its 2024 revenue could derive from advertisements related to fraudulent goods, according to internal documents obtained by Reuters. These documents reveal that the social media giant delivers around 15 billion scam ads daily, contributing to approximately $16 billion in sales.
For over three years, Meta has struggled to identify and halt a significant influx of ads that exposed its users across Facebook, Instagram, and WhatsApp to fraudulent e-commerce schemes, illegal online gambling, and the distribution of banned medical products. Despite being flagged by internal warning systems, marketers whose activity raised suspicion were only banned if there was a 95% certainty of fraudulent behavior. If the evidence was less certain but still indicative of likely scams, Meta imposed higher ad rates on those advertisers.
The documents also highlight how Meta’s ad personalization system inadvertently encourages users who engage with scam ads to see even more of them. This practice is likely to anger banks that bear the financial consequences of scams targeting their customers, as they demand social media platforms take responsibility for scams originating from their sites.
Riccardo Tordera-Ricchi, director of policy at The Payments Association, stated that while regulators have focused on payment firms to bolster protections against fraud, the actual source of the problem needs more attention. He criticized social media companies for profiting from scam ads while ignoring the issue.
Internal estimates from Meta suggest that scam ads could account for 10.1% of its revenue in 2024, a figure Meta spokesperson Andy Stone acknowledged was rough and over-inclusive. He noted that efforts to combat fraud have led to a significant reduction in reports of scam ads globally.
Meta’s confidential assessments show a commitment to reducing scam ads significantly in the coming years, alongside recognition that its platforms play a substantial role in the global fraud economy. The company has faced scrutiny from regulators in various countries, including an investigation by the U.S. Securities and Exchange Commission for running ads that promote financial scams.
As regulator pressure mounts, Meta is reassessing its revenue from scam ads while also planning to invest heavily in AI technologies. The challenge will be to balance enforcement against scams with its revenue objectives, especially as regulatory fines loom.