Two examples of fraudulent investment ad on Facebook
A flurry of investment scam advertisements running on Meta’s platforms, including Facebook newsfeeds, are threaten the pocketbooks of consumers nationwide and Meta’s existing systems have been shown to be insufficient to address the problem, 42 attorney’s general said in a letter to Meta Wednesday. They asked Meta to take immediate action to improve its capabilities to detect and respond to these ads.
“It’s alarming to see how easy investment scam ads – which have cost some consumers their life savings – can be created and disseminated on Meta platforms,” California Attorney General Rob Bonta said in a statement.
Calling the growing trend “a recipe for disaster,” Bonta said Meta can and must do right by the millions of people that use its platforms.
Investment scam ads running on Meta’s platforms deceive consumers with images of well-known investors such as Warren Buffett, Elon Musk, and Andrew Sorkin. When they click on the Meta ads, users are prompted to download WhatsApp and become members of groups that aren’t sponsored or affiliated with the investors shown in the ads.
Then, they’re targeted in an illegal investment scheme, known as a “pump and dump.” As part of the scheme, scammers encourage users to invest in penny stocks, which inflates or pumps up the stock price. Next, the scammers quickly sell the stocks, leaving the users holding worthless stock that they can no longer sell to recover their losses.
In some cases, these scams have resulted in users losing their life savings.
The impact on victims is devastating, leading not only immense financial losses, but also significant psychological and social consequences, he said.
In the letter, the attorneys general urge Meta to adopt protocols to properly tackle the issue. If Meta can’t effectively curb the harmful scams, the attorneys general urge Meta to stop running investment advertisements.
Although Meta uses a combination of automated systems and occasional human review to try to detect, block, and remove scam advertisements, these systems don’t work and allow vast numbers of scam ads to get through to publication, Bonta said.
Among other states signing the letter to Meta are New York, Pennsylvania, Colorado, Illinois, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, New North Carolina, North Dakota, Ohio, Virginia, Washington, and Wyoming.
