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A sweeping Reuters investigation has put a price tag on Meta\u2019s tolerance for ad fraud: billions of dollars a year. For Rob Leathern, a former Meta executive who led the company\u2019s business integrity operations until 2019, the findings expose a stark tension between revenue growth and consumer harm.<\/p>\n
The report, published Monday, found that Meta generated roughly $18 billion in advertising revenue from China in 2024, around 10% of its global revenue, even as internal documents showed that nearly one-fifth of that (about $3 billion) came from ads tied to scams, illegal gambling, pornography, and other prohibited activity. Meta internally labeled China its top \u201cscam exporting nation,\u201d accounting for 25% of all scam and banned-product ads globally, according to the report.<\/p>\n
Meta\u2019s core social media platforms (Facebook, Instagram, WhatsApp) are blocked in China, but the company still earns billions from Chinese advertisers targeting global users.<\/p>\n
The investigation, Leathern told Fortune<\/em>, illuminates several issues with both Meta and the broader Chinese ad market. \u201cIt appears that a variety of business partners that Meta has are not conducting themselves in an ethical way and or there are employees of those companies that are not doing what they\u2019re supposed to be doing,\u201d he said. \u201cIt\u2019s quite telling that Meta took down its entire partner directory, which obviously means that they must be reviewing their partners, and there\u2019s a lot of them.\u201d<\/p>\n \u201cScams are spiking across the internet, driven by persistent criminals and sophisticated, organized crime syndicates constantly evolving their schemes to evade detection. We are focused on rooting them out by using advanced technical measures and new tools, disrupting criminal scam networks, working with industry partners and law enforcement, and raising awareness on our platforms about scam activity. And when we determine that bad actors have violated our rules prohibiting fraud and scams, we take action,\u201d a Meta spokesperson told Fortune<\/em> in a statement.\u00a0\u00a0<\/p>\n Meta communications chief Andy Stone, however, pushed back on the investigation, posting on Threads, \u201cOnce again, Reuters is misconstruing and misrepresenting the facts.\u201d He argued that CEO Mark Zuckerberg\u2019s \u201cintegrity strategy pivot\u201d\u2014which included instructing the China ads-enforcement team to reportedly \u201cpause\u201d its work\u2014was to improve teams\u2019 goals and \u201cinstruct them to redouble efforts to fight frauds and scams globally, not just from specific markets.\u201d\u00a0<\/p>\n Stone also claimed that these teams have \u201cdoubled their fraud and scam reduction goal and over the last 15 months, user reports of scam ads have declined by well over 50%.\u201d<\/p>\n The revelations published by Reuters echo\u2014but far exceed\u2014the AI-driven deepfake scheme earlier this year involving Goldman Sachs during which scammers used AI-generated videos of investment strategist Abby Joseph Cohen to lure retail investors into fraudulent WhatsApp groups via Instagram ads. <\/p>\n Reuters\u2019 reporting suggests Meta\u2019s China-linked scam problem is not an edge case or a blind spot, but an allegedly known and lucrative segment of its advertising business.<\/p>\n According to internal estimates cited by Reuters, Meta served as many as 15 billion \u201chigh-risk\u201d fraudulent ads per day, generating roughly $7 billion annually. The company required a 95% confidence threshold before banning fraudulent advertisers; those falling below it were often allowed to continue operating, sometimes at higher fees. Meta also established a 0.15% revenue \u201cguardrail\u201d (about $135 million) as the maximum revenue it was willing to forgo to crack down on suspicious ads, even as it earned $3.5 billion every six months from ads deemed to carry \u201chigher legal risk.\u201d<\/p>\n Internal decision-making was explicit. When enforcement staff proposed shutting down fraudulent accounts, internal documents reviewed by Reuters showed they sought assurance that growth teams would not object \u201cgiven the revenue impact.\u201d Asked whether Meta would penalize high-spending Chinese partners running scams, the answer was reportedly \u201cNo,\u201d citing \u201chigh revenue impact.\u201d Internal assessments reportedly noted that revenue from risky ads would \u201calmost certainly exceed the cost of any regulatory settlement,\u201d effectively treating fines as a cost of doing business.<\/p>\n In late 2024, Meta reinstated 4,000 second-tier Chinese ad agencies that had previously been suspended, unlocking $240 million in annualized revenue\u2014roughly half of it tied to ads violating Meta\u2019s own safety policies, according to the investigation. More than 75% of harmful ad spending, Reuters found, came from accounts benefiting from Meta\u2019s partner protections. The company also disbanded its China-focused anti-scam team.<\/p>\n An external audit commissioned by Meta from the Propellerfish Group reached a blunt conclusion when investigating fraud and scams on the platform: Meta\u2019s \u201cown behavior and policies\u201d were promoting systemic corruption in China\u2019s advertising ecosystem. Reuters reported that the company largely ignored the findings and expanded operations anyway.<\/p>\n Leathern, who reviewed the reporting and internal figures referenced in the report, told Fortune<\/em> the scale of the problem was difficult to defend. \u201cI was disappointed that the violation rates for the China-specific advertisers were as high as they were in the last year,\u201d he said. \u201cIt\u2019s disappointing, because there are ways to make it lower.\u201d<\/p>\n His critique goes to the heart of the failure. Platforms, he said, should hold intermediary agencies accountable for the quality of advertisers they bring in. \u201cIf you\u2019re measuring violation rates coming from certain partners, and those rates are above a threshold every quarter or every year, you can just fire your worst-performing customers,\u201d he said.<\/p>\n \u201cI think it\u2019s important for us to have some sense of transparency into how policies are being enforced and what companies are doing in terms of reducing scams on their platforms,\u201d Leathern added.<\/p>\n Over the last 18 months, Meta has removed or rejected more than 46 million advertisements placed via so-called resellers, or large Chinese ad firms. And more than 99% of ad accounts associated with resellers found to be violating the company\u2019s fraud policies were proactively detected and disabled.\u00a0<\/p>\n Aside from a need for transparency, Leathern warned that prioritizing short-term revenue over trust ultimately threatens the business itself. \u201cIf people don\u2019t trust advertisers, advertising, it reduces the effectiveness of that channel for all advertisers,\u201d he said. \u201cThere\u2019s a lot of risk to their business, directly and indirectly, from not doing a good enough job on stopping scams.\u201d<\/p>\n The human cost is already visible. Reuters documented victims across North America and Asia, including U.S. and Canadian investors who lost life savings to fake stock and crypto ads, Taiwanese consumers misled into buying counterfeit health products, and a Canadian Air Force recruiter whose Facebook account was hijacked to run crypto scams. Meta\u2019s own internal safety staff estimated the company\u2019s platforms were \u201cinvolved\u201d in roughly one-third of all successful U.S. scams, linked to more than $50 billion in consumer losses.<\/p>\n The problem is intensifying as generative AI lowers the barrier for scammers. \u201cYou can create something that looks plausible far more easily than ever before,\u201d Leathern said. \u201cThe speed and adaptability of criminals and their use of AI tools just makes the environment far more tricky.\u201d<\/p>\n Yet Leathern said platforms like Meta have not been sufficiently transparent about how aggressively they are using those same tools to fight abuse. \u201cWe just don\u2019t have a ton of insight into what they\u2019re doing to reduce scams and fraud coming in through ads,\u201d he said.<\/p>\n For Leathern, the investigation should be a turning point. \u201cI hope they see this as an opportunity to improve things for people,\u201d he said.<\/p>\n<\/div>\n #Meta #integrity #chief #report #reveals #disappointing #fraud #epidemic #tech #giant<\/p>\n","protected":false},"excerpt":{"rendered":" A sweeping Reuters investigati… <\/p>\n","protected":false},"author":1,"featured_media":3920,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[3800,1088,173,3801,2825,3805,3802,675,3804,694,607,1040,307,3803,930,953],"_links":{"self":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/3919"}],"collection":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3919"}],"version-history":[{"count":0,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/3919\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/media\/3920"}],"wp:attachment":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3919"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3919"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3919"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}