JAPANESE regulators last year were upset by a flood of ads for obvious scams on Facebook and Instagram, from fraudulent investment schemes to fake celebrity product endorsements created by artificial intelligence.
Meta, owner of the two social media platforms, feared Japan would soon force it to verify the identity of all its advertisers, internal documents reviewed by Reuters show.
The step would likely reduce fraud but also cost the company revenue.
To head off that threat, Meta launched an enforcement blitz to reduce the volume of offending ads and sought to make problematic ads less “discoverable” for Japanese regulators, the documents show.
The documents are part of an internal cache of materials from the past four years in which Meta employees assessed the fast-growing level of fraudulent advertising across its platforms worldwide.
They also reveal ways that Meta, to protect billions of dollars in ad revenue, has resisted efforts by governments to crack down.
In this case, Meta’s remedy hinged on its “Ad Library”, a publicly searchable database where users can look up Facebook and Instagram ads using keywords.
Meta realised Japanese regulators were searching it as a “simple test” of “Meta’s effectiveness at tackling scams”, one document noted.
The scrubbing, Meta teams explained in documents regarding their efforts to reduce scam discoverability, sought to make problematic content “not findable” for “regulators, investigators and journalists”.
Within a few months, they said in one memo after the effort, “we discovered less than 100 ads in the last week, hitting zero for the last four days of the sprint”.
So successful was the search-result cleanup that Meta, the documents show, added the tactic to a “general global playbook” it has deployed against regulatory scrutiny in other markets, including the United States, Europe, India, Australia, Brazil and Thailand.
The playbook, as it’s referred to in some of the documents, lays out Meta’s strategy to stall regulators and put off advertiser verification unless new laws leave them no choice.
Meta spokesman Andy Stone said in a statement: “Meta teams regularly check the Ad Library to identify scam ads because when fewer scam ads show up there that means there are fewer scam ads on the platform.”
Reuters reported in November that scam ads Meta considers “high risk” generate as much as US$7 billion in revenue for the company each year. Last December, the news agency found that Meta tolerates rampant fraud from advertisers in China.
In response to Reuters’ coverage, two US senators urged regulators at the Securities and Exchange Commission and the Federal Trade Commission to investigate and “pursue vigorous enforcement action where appropriate”.
Citing Reuters reporting, the attorney general of the US Virgin Islands also sued Meta for allegedly “knowingly and intentionally” exposing users of its platforms to “fraud and harm” and “profiting from scams”.
Google in 2020 announced that it would gradually adopt universal verification, and said earlier this year it has now verified more than 90 per cent of advertisers.
But Meta has baulked at the cost.
Despite reaping revenue of US$164.5 billion last year, almost all of which came from advertising, Meta has decided not to spend the roughly US$2 billion it estimates universal verification would cost, the documents show.
Meta, instead, has decided to employ a “reactive only” stance, according to the documents.
That means resisting efforts at regulation — through lobbying but also through measures like the scrubbing of Ad Library searches in Japan last year.
A known weakness in Meta’s defences is the ease of advertising on its platforms.
To purchase most advertisements, all a client needs is a user account — easily created with an email or phone number and a user-supplied name and birthdate.
Even if an advertiser gets banned, there is nothing to stop it from returning with a new account. A fraudster can merely sign up again.
Meta has known about the problem for years, documents and interviews with former staffers show.
Because scamming is a global business — and Meta’s algorithms allow clients to choose multiple markets in which to advertise — many advertisers seeking to place fraudulent posts do so in more than one geography.
If ultimately regulators force mandatory verification for all, the playbook states, Meta should once again stall.
“Keep engaging with regulator on extension,” one document advises.
* The writer is from Reuters
© New Straits Times Press (M) Bhd
