An Australian government agency and a billionaire are suing Facebook’s parent company over claims it hasn’t done enough to protect consumers from scams using the names of celebrities on the social media platform.
Andrew Forrest, Australia’s second-richest person, says he tried for years to get Facebook to act as photos of him were plastered across false advertisements on the social media platform, luring users into crypto scams. As consumers duped of thousands of dollars contacted him to complain, Forrest was having no success trying to get Facebook to remove the ads, he says, and an open letter to Mark Zuckerberg went without response. “Meanwhile innocent Australians…kept investing under my name,” says Forrest, the founder and chairman of Fortescue Metals Group.
Forrest filed what’s called a “private prosecution” against Meta – Facebook’s new corporate name – under Australian law, which permits individuals to file criminal complaints against other individuals or companies. In the complaint, Forrest alleges that the company’s actions ran afoul of Australian anti-money laundering laws because it didn’t take sufficient steps to stop criminals from using its platform to defraud Australian users with scam ads. A month later, Australian government agency, the Australian Competition and Consumer Commission, echoed his claims in a separate lawsuit, alleging that the social media giant engaged in false, misleading or deceptive conduct by publishing the fake ads.
Such scams are not unique to Australia. As recently as February, scam ads on Facebook featured bogus cryptocurrencies supposedly backed by Amazon and Tesla, and individuals including Warren Buffett. In several cases, there were even ads that included an image of Mark Zuckerberg, Meta’s CEO, enticing users to invest in a new “Meta token”.
The claims made by Forrest and the Australian consumer protection agency mark the first time a jurisdiction has attempted to hold Facebook accountable for content published on its site — something the United States has been unwilling to do so far. “Dissatisfaction with the social media platforms is mounting around the world,” says Paul Barrett, NYU Stern Center for Business and Human Rights, “and that the United States is well behind a number of other jurisdictions, Australia being one, the EU being a much larger and influential jurisdiction, that have been moving to greater regulation and oversight.”
In an emailed statement, a Facebook spokesperson said the company has cooperated with the ACCC’s investigation and intends to defend itself against the ongoing litigation. “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,” the Facebook spokesperson. “We use technology to detect and block scam ads and work to get ahead of scammers’ attempts to evade our detection systems.”
On Monday local time, Facebook was scheduled to appear in an initial hearing for Forrest’s criminal case in a Perth court, but didn’t make an appearance, prompting the court to enter a plea of not guilty on the company’s behalf. Simon Clarke, a member of Forrest’s legal team, says he received a letter from Facebook representatives, stating the company wouldn’t appear because it believed the court didn’t have jurisdiction. The next hearing is scheduled for June 17. “Arguing that even though they make a fortune from Australian people they don’t have to defend themselves in West Australian court,” Forrest says, “that goes to the core of [Meta’s] attitude that our job is just to make money.”
Forrest previously had filed a separate civil complaint in September in Superior Court of California, San Mateo County, alleging that Facebook had aided and abetted fraud, and was negligent in warning users because it sent them targeted scam ads. Facebook’s lawyers responded earlier this month that the company is protected from Forrest’s claims by Section 230 of the federal Communications Decency Act — which absolves liability for internet companies from third-party content published on their platforms — arguing that “organizing, recommending, and amplifying third-party content is not the same as creating it, and challenging the targeting of content inherently treats a Defendant as a publisher or speaker.” An upcoming hearing is scheduled for April 22.
Forrest, who made his fortune in mining and is worth $19 billion according to a Forbes estimate, is among a group of Australian public figures and celebrities, including a former New South Wales premier Mike Baird, popular television host David Koch and the entrepreneur Dick Smith, to have been included in the scam ads. Forrest first learned that his image was being used in 2019, when, he says, Facebook users contacted him saying they had been scammed.
The typical scam ads enticed users to click through to a third-party website with a fake media article that would include false quotes and images of celebrities endorsing the advertised cryptocurrency product, according to the ACCC. After signing up, users were then contacted by scammers who pressured them into handing over money.
Forrest says he was unsuccessful in trying to reach Facebook’s Australian executives, prompting him to write an open letter to Meta CEO Mark Zuckerberg in 2019, who he’d previously met through initiatives linked to the Giving Pledge, a campaign that encourages mega-wealthy individuals to give most of their wealth to philanthropic causes. When Forrest finally heard from Facebook executives in Australia, he says he was given “codswallop” — Australian slang for ‘rubbish’ — that Facebook didn’t have the algorithms to identify scams. “Why wouldn’t you have one person identifying this?” he says. “They refused to do anything that wasn’t algorithmic.”
In one case, a Facebook user lost $650,000 in the scam, according to the ACCC. In many cases, the ACCC alleged, Facebook still didn’t remove the scam ads after being notified by the celebrities implicated in the false ads. In its claim, the agency alleges “the technology of Meta enabled these ads to be targeted to users most likely to engage with the ads,” and that Meta failed to detect and prevent spam and protect its users from scams.
The ACCC, which filed its complaint on March 18, is only the latest legal headache for Facebook in Australia. The agency previously sued the company in 2020 accusing it of collecting user data without permission. Then, in February 2021, Australia enacted a law that would force Facebook and Google to negotiate payments to publishers for news content shared on their platforms. The move caused an uproar and prompted Facebook to shut off its news services to Australian users before reinstating the function after Facebook agreed to pay some publishers.
But despite efforts in the U.S. to regulate technology firms — including calls to rewrite Section 230 of the federal Communications Decency Act — the Australian action against Facebook isn’t likely to prompt a “stampede” of litigation in the U.S. over the crypto scams, NYU’s Barrett says. Though, he adds, the litigation Down Under likely won’t be an issue that Facebook can ignore. “There are a lot of people around the world that are unhappy,” he says. “It’s one more whack at the tree.”