Meta’s trust problem: Investigation reveals how scam ads stayed profitable

Meta doesn’t have a “fraud ads problem.” It has an incentive problem, because the quickest way to stop a scam is usually the quickest way to slow down ad money. In other words, scams are a revenue line until they become a headline.

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That’s the uncomfortable heartbeat of a recent Reuters investigation into Meta’s stance on scam ads and how the social media giant chooses to deal with them. 

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According to the Reuters report, Meta created a global “playbook” to fend off regulators pushing for tougher action on scammers – especially laws that would mandate stronger identity verification for advertisers. Instead of making verification the default, the investigative report alleges Meta used tactics that made scam ads less visible to watchdogs (including in its Ad Library) while lobbying for looser, voluntary approaches.

The money angle is not subtle. The report describes internal Meta discussions acknowledging “high-risk” scam ads could contribute up to about $7 billion a year, and that universal verification would reduce fraud – but would also cost billions and risk revenue. In Taiwan, where verification was required, scam ads reportedly dropped by more than 90%, as the fix worked. It just wasn’t the first choice for Meta to do so, alleges the report.

Honestly, if this were a one-off, maybe we’d have some sympathy for the social media giant. But it fits a broader Meta pattern – when harm is measurable, and the remedy is known (but expensive), the company too often chooses minimisation over transformation.

Also read: Meta’s new AI model is called Avocado: Everything we know about it so far

Cambridge Analytica was the early template. After the scandal over third-party data harvesting, the US Federal Trade Commission hit Facebook with a $5 billion penalty in July 2019 and imposed sweeping privacy restrictions, saying the company violated a prior privacy order. In the UK, the Information Commissioner’s Office issued a £500,000 fine (the legal maximum then) and later confirmed Facebook agreed to pay after withdrawing its appeal, warning that UK citizen data had been exposed to a “serious risk of harm.”

In September 2021, The Wall Street Journal reported that internal research found Instagram could worsen body-image issues for a sizable minority of teen girls, where as many as 32% of teen girls said Instagram made them feel worse when they already felt bad about their bodies. Meta disputed the Journal’s framing and published its own interpretation of what the research “really says.” But the bigger point survived: the harm signal was inside the building.

Frances Haugen, a former employee, sharpened that point in written testimony to the US Senate. She wrote that Meta’s leaders “know ways to make Facebook and Instagram safer” but “won’t make the necessary changes” because they prioritise profits.

Now we’re back to scams, the most common kind of online harm, and the kind that scales beautifully with frictionless ad buying. Reuters has separately reported that internal Meta documents projected roughly $16 billion in 2024 revenue tied to scam ads and other prohibited content, alongside a strategy that often waits for very high confidence before removing suspected fraud.

Meta will say – often fairly – that it removes fraud, invests in safety, and can’t catch everything. The worry isn’t that Meta ignores problems. It’s worse, where Meta identifies the problem, quantifies the fix, and then treats the fix like a cost centre until regulators force its hand. When a platform that large trains itself to bargain with harm, the rest of us ordinary users ultimately pay the price.

Also read: Meta buying Manus AI: Mark Zuckerberg worried about losing AI race to Google, OpenAI?

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Jayesh Shinde

Executive Editor at Digit. Technology journalist since Jan 2008, with stints at Indiatimes.com and PCWorld.in. Enthusiastic dad, reluctant traveler, weekend gamer, LOTR nerd, pseudo bon vivant. View Full Profile