In a move that could set the stage for further government action around the world, Australia has brought a lawsuit against Meta, the parent company of Facebook. The suit focuses on Facebook's role in perpetuating cryptocurrency scams on the platform that are spread through the website's self-serve advertising features. Critics say that the website doesn't go far enough in effectively moderating the contents of these ads, and its users are paying the price by falling victim to widespread crypto scams.
The suit is being put forward by the Australian Competition and Consumer Commission (ACCC), the primary competition regulator of Australia that protects consumer rights in accordance with the Competition and Consumer Act.
It marks the first time that a government has taken action against Meta for lax advertising policies and their role in scams, although others have brought lawsuits over privacy and consumer data collection in the past.
Lawsuit Joins Criminal Case Filed by Aussie Billionaire
This development comes shortly after the filing of a criminal case against Facebook by Australian billionaire Andrew Forrest. He was prominently featured in fake ads on the platform, with scammers using his reputation for investment success to drive victims towards phony investment opportunities. Forrest has been aware of the issue for some time, publishing an open letter to the company in 2019.
Andrew Forrest is far from the only Australian celebrity affected by these types of online crypto scams. On social media, these ads almost always feature a public figure in an attempt to lend legitimacy to their supposed investment opportunities. Holly Willoughby, Pete Evans, and notably the entire cast of Australia's version of Shark Tank have all had their likenesses stolen and used in crypto scam ad campaigns.
ACCC Meta Lawsuit
While the scammers seem to adjust their marketing regionally, the problem is by no means limited to Australia. In the UK, finance journalist Martin Lewis was going to bring a lawsuit against Facebook in 2018 over the very same problem but went on to settle. Facebook agreed to donate £3 million to anti-scam projects and to develop a one-click reporting tool. Lewis cited numerous examples of victims reaching out to him to try to get their money back, still believing he was involved with the scam.
ACCC Seeks to Protect Australians From Widespread Scams
At the core of the ACCC's case is their allegation that Facebook's lax moderation and enforcement policies have aided and abetted the spread of content in advertisements that they should have known to be false. It is their position that Facebook was fully aware that scams were prevalent on their platform but simply did not take steps to deal with them.
At this time, Meta has said that they do intend to present a defense against the lawsuit. The company maintains that these ads are against their policies and that the technology they have in place to detect and block these ads is sufficient to protect users.
However, the scams continue to generate huge numbers of victims both in Australia and abroad. The ACCC gave one specific example of a consumer who lost over $650,000 to one such scam. These kinds of fake investment opportunity scams cost Australians over $177 million in total in 2021.
How These Crypto Scams Work
The ACCC alleges that Facebook is responsible for its lack of action on scam advertisements on its platform. However, Facebook itself isn't behind these scams. Anyone can put ads on Facebook through their self-serve system. Scammers are simply taking advantage of the apparent lack of moderation and enforcement on the website.
The ads themselves are fairly simple, often featuring an image of one celebrity or another and a few lines of text about an amazing Bitcoin investment opportunity with guaranteed returns. Curious users might click the ad to see what it's about and are often brought to a second website with more marketing tactics. These are typically made to look like news websites, and the user can read on about the supposed benefits of the investment opportunity, along with further testimonies.
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Eventually, the victim registers to the fake investment platform, at which point offshore CFD brokers will begin reaching out personally to encourage the victim to deposit more and more money. The platform will show amazing gains day after day, making the victim believe they're really making a fortune. Unfortunately, when they go to make a withdrawal, the scammers cut off contact completely, and the victim is left with nothing
What Australians Can Do to Combat These Scams
The ACCC cautions Australians to be wary of any investment opportunities they find online, especially those found through ads featuring celebrity endorsements. They ask anyone who falls victim to or notices a scam to report them, but our viewers can report the fake ads to us and we will file a report to the local authorities. The ACCC can take effective action against scam operations and spread awareness to protect other Australians from falling victim to the same scams.
Credit: TheDrum.Com
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