fbpx
News & Analysis

Competition watchdog the ACCC joins Andrew Forrest in suing Facebook over celebrity scam ads

- March 18, 2022 3 MIN READ
An example of the scam ads appearing on Facebook, from a screenshot taken by Startup Daily in November 2019.
The Australian Consumer and Competition Commission (ACCC) has launched legal action against Facebook’s parent company, Meta, alleging the social media giant engaged in false, misleading or deceptive conduct by publishing scam advertisements featuring prominent Australians.

The Federal Court case claims Facebook was in breach of the Australian Consumer Law (ACL) or the Australian Securities and Investments Commission Act (ASIC Act).

It is also alleged that Meta aided and abetted or was knowingly concerned in false or misleading conduct and representations by the advertisers.

An example of an Andrew Forrest cryptocurrency scam ad.

The ACCC’s action follows in the wake of a similar case launched by mining billionaire Dr Andrew Forrest last month over scam ads featuring him that appeared on Facebook.

The furious Fortescue Metals chair and philanthropist said Facebook was “one of the world’s most pernicious publishers”, and was being “embarrassingly exploited” while also profiting from the scam.

The mining billionaire has campaigned vociferously against the scam ads since 2019. A woman in Western Australia lost $60,000 to scammers after seeing the ads featuring Dr Forrest.

The matter is due to receive an initial hearing before the Western Australian Magistrate’s Court on March 28 ahead of a committal hearing later this year.

The ACCC case alleges that the ads, which promoted investment in cryptocurrency or money-making schemes, were likely to mislead Facebook users into believing the advertised schemes were associated with well-known people featured in the ads, such as businessman Dick Smith, TV presenter David Koch, chair of Pinstripe Media, publishers of Startup Daily, and former NSW Premier Mike Baird, who by 2019 was a senior NAB executive.

Startup Daily reported on the Baird scam ads when they swamped the social media platform in late 2019.

A Mike Baird scam ad seen by Startup Daily in November 2019

The ads contained links which took Facebook users to a fake media article that included quotes attributed to the public figure featured in the ad endorsing a cryptocurrency or 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.

ACCC Chair Rod Sims said the regulator’s case is that Meta is responsible for ads it publishes on its platform.

“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,” he said.

“Those visits to landing pages from ads generate substantial revenue for Facebook.”

Sims said the celebrity endorsement cryptocurrency scam ads continued to appear on Facebook even after public figures complained to the company about them.

“We allege that the technology of Meta enabled these ads to be targeted to users most likely to engage with the ads, that Meta assured its users it would detect and prevent spam and promote safety on Facebook, but it failed to prevent the publication of other similar celebrity endorsement cryptocurrency scam ads on its pages or warn users,” he said.

“Meta should have been doing more to detect and then remove false or misleading ads on Facebook, to prevent consumers from falling victim to ruthless scammers.”

Sims said one person lost more than $650,000 due to one of the scam ads

“Apart from resulting in untold losses to consumers, these ads also damage the reputation of the public figures falsely associated with the ads,” Sims said.

“Meta failed to take sufficient steps to stop fake ads featuring public figures, even after those public figures reported to Meta that their name and image were being featured in celebrity endorsement cryptocurrency scam ads.”

The ACCC is seeking declarations, injunctions, penalties, costs and other orders.

NOW READ: Andrew Forrest launches legal action against Facebook over cryptocurrency scam ads