Meta Faces Calls For Federal Scrutiny After Report Claims Revenue From Fraudulent Ads

• A recent Reuters report claimed that Meta earned a substantial portion of its revenue from fraudulent or banned ads.
• The senators demand that Meta return the ill-gotten earnings, pay fines, and stop running such content. 
• Meta anticipated that roughly 10% of its 2024 revenue, about $16 billion, would come from illicit ads.

U.S. Senators Josh Hawley and Richard Blumenthal have reportedly urged the Federal Trade Commission (FTC) to scrutinize Meta Platforms Inc. (META) for allegedly profiting from scam advertising on Facebook and Instagram.  

According to a Reuters report, in a joint letter to the Federal Trade Commission and the Securities and Exchange Commission (SEC), the lawmakers called for immediate investigations. 

Allegations

The move comes after a recent Reuters report claimed that Meta earned a substantial portion of its revenue from fraudulent or banned ads. The senators demand that Meta return the ill-gotten earnings, pay fines, and stop running such content.  

Meta Platforms’ stock traded over 1% higher on Monday’s premarket. On Stocktwits, retail sentiment around the stock remained in ‘bearish’ territory amid ‘normal’ message volume levels. 

Higher-Risk Scam Ads

Internal documents allegedly show that Meta anticipated making roughly 10% of its 2024 revenue, about $16 billion, from illicit ads. One internal file reportedly says Meta pulled in $3.5 billion every six months from so-called higher-risk scam ads. The documents claim Meta’s internal safeguards and its own anti-fraud policies didn’t always capture or block these ads.   

The lawmakers highlighted that Meta may facilitate a disproportionate share of online fraud. FTC data cited by the senators reports Americans lost $158.3 billion to fraud last year, implying Meta-associated scams may have caused over $50 billion in losses.

“Even a short review of Meta’s Ad Library at the time of this letter shows clearly identifiable advertisements for illicit gambling, payment scams, crypto scams, AI deepfake sex services, and fake offers of federal benefits,” the senators said.

META stock has gained over 5% in the last 12 months. 

Also See: Why Did WeRide Stock Surge 8% Pre-Market Today?

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