Australia’s competition regulator has taken Meta to court for allegedly allowing misleading cryptocurrency advertisements on Facebook, in a test case for the parent group’s responsibilities over actions that cause consumer harm on the social media platform.
The Australian Competition and Consumer Commission alleged that Meta was in breach of consumer and investment laws and the US company had “aided and abetted or was knowingly concerned in false or misleading conduct and representations”.
The regulator’s legal action follows a separate case launched by Andrew Forrest, the Australian mining tycoon, who sued Meta this year after his image was used to promote cryptocurrency schemes without his consent.
Rod Sims, chair of the ACCC, has also identified “dark patterns” in the online commerce and subscriptions market that cause harm as the organisation’s next target.
The alleged scams began in 2019 and used images of well-known Australians on Facebook to link to false media articles urging consumers to sign up to cryptocurrency schemes. The Facebook users were then subjected to high-pressure selling techniques.
The targeted individuals suffered “untold losses” according to Sims, who said one person was allegedly duped into spending A$650,000 (US$477,000).
The ACCC said Meta had generated “substantial revenue” by linking from Facebook to the false media reports and that its technology had enabled “ruthless scammers” to target consumers who were most likely to engage with the ads.
It also said the promotions continued to appear even after some of the celebrities publicly complained about the use of their likenesses. “The essence of our case is that Meta is responsible for these ads that it publishes on its platform,” Sims said.
Meta said that it has co-operated with the ACCC to date and would review the filing in the Federal Court.
“We don’t want ads seeking to scam people out of money or mislead people on Facebook — they violate our policies and are not good for our community. We use technology to detect and block scam ads and work to get ahead of scammers’ attempts to evade our detection systems,” the company said.
About 5 per cent of Facebook’s monthly active users were fake accounts in the fourth quarter of 2021 and it took down 1.7bn such accounts in that period, according to the company.
The ACCC’s case is its latest attempt to crack down on digital platforms following the introduction of a news bargaining system last year that effectively forced Meta and Google to pay media companies for their journalism.
The legal action was announced on the last day of Sims’ 11-year tenure leading the regulator. He is credited with transforming the ACCC into a watchdog with global influence through the introduction of the news bargaining code and the publication of research on digital platforms that has been used by other national regulators.
Sims will be succeeded by Gina Cass-Gottlieb, a competition lawyer.
