Meta estimates 10% of annual revenue originates from scams

Last year, Meta estimated that 10% of its total annual revenue — $16 billion — would originate from fraudulent advertisements on its platforms, according to a Reuters report.

For a period of three years, Meta failed to safeguard its users from advertisements promoting illegal gambling, suspicious investment schemes, and banned medical items, according to documents obtained by Reuters. These fraudulent ads are designed to demand payments from less knowledgeable users by falsely presenting non-existent products or services.

Meta has a system for detecting the probability that an advertising campaign is a scam, but the social media tech giant only deactivates an advertiser’s account if it is 95% sure that the advertiser is executing fraud.

Otherwise, the tech giant is growing its revenue by charging increased rates to advertisers suspected of fraud, which apparently aims to prevent future ad purchases, yet ultimately benefits Meta when those advertisers proceed with buying ads.

TechCrunch reached out to Meta for a comment but did not receive a response before publication. According to a report by Reuters, the company spokesperson Andy Stone stated that the documents utilized by Reuters offer a selective viewpoint that misrepresents Meta’s approach to fraud and scams.

Andy Stone explained that over the last 18 months, Meta has decreased user reports of scam ads by 58%, and the company has removed over 134 million scam ads from its social media platforms.