Meta sued by Australian watchdog over false advertising on Facebook

Meta is being sued by the Australian Competition and Consumer Commission (ACCC) for allegedly engaging in false, misleading or deceptive conduct by publishing scam advertisements featuring prominent Australian public figures on Facebook. ACCC alleged that this was in breach of the Australian Consumer Law or the Australian Securities and Investments Commission Act. Meta also allegedly aided and abetted, or was knowingly concerned, in false or misleading conduct and representations by the advertisers.

Additionally, ACCC alleged that the ads, which promoted investment in cryptocurrency or money-making schemes, were likely to mislead Facebook users into believing the advertised schemes were associated with well-known people featured in the ads. These include businessman Dick Smith, TV presenter David Koch and former NSW Premier Mike Baird. However, the schemes were, in fact, scams as the people featured in the ads had never approved nor endorsed them.

ACCC said in a statement that the ads contained links that took Facebook users to a fake media article, which included quotes attributed to the public figure featured in the ad endorsing a cryptocurrency or money-making scheme. Users were then invited to sign up and later contacted by scammers who used high-pressure tactics, such as repeated phone calls, to convince users to deposit funds into the fake schemes.

ACCC chair Rod Sims said that the essence of its case is that Meta is responsible for the ads that it publishes on its platform. “It is a key part of Meta’s business to enable advertisers to target users who are most likely to click on the link in an ad to visit the ad’s landing page, using Facebook algorithms. Those visits to landing pages from ads generate substantial revenue for Facebook," he added. 

In 2021, Meta's global advertising revenue was US$115 billion. However, Scamwatch figures show that in 2021, consumers reported losses of US$99 million to cryptocurrency investment scams, ACCC said.

Meta was allegedly aware that the celebrity endorsement cryptocurrency scam ads were being displayed on Facebook but did not take sufficient steps to address the issue. The celebrity endorsement cryptocurrency scam ads were still being displayed on Facebook even after public figures around the world have complained that their names and images had been used in similar ads without consent, ACCC said.

Sims claimed that Meta's technology enabled these ads to be targeted to users most likely to engage with the ads. "Meta assured its users it would detect and prevent spam and promote safety on Facebook, but it failed to prevent the publication of other similar celebrity endorsement cryptocurrency scam ads on its pages or warn users,” he said.

According to Sims, Meta should have been doing more to detect and then remove false or misleading ads on Facebook, to prevent consumers from falling victim to ruthless scammers. Apart from resulting in untold losses to consumers, these ads also damage the reputation of the public figures falsely associated with the ads. "Meta failed to take sufficient steps to stop fake ads featuring public figures, even after those public figures reported to Meta that their name and image were being featured in celebrity endorsement cryptocurrency scam ads,” Sims explained.

He also cited an instance where a consumer lost over US$6500,000 due to one of these scams being falsely advertised as an investment opportunity on Facebook. The ACCC is currently seeking declarations, injunctions, penalties, costs and other orders.

Meta was embroiled in another lawsuit earlier this month as well. The lawsuit alleged that Meta misled investors about its mitigation efforts to counteract the impact that Apple’s iOS14 privacy changes would have on its business. The tech giant is alleged to have “painted a false and misleading picture” about the effectiveness of mitigation efforts it put in place to counteract the changes. It was only this February that Meta disclosed its mitigation efforts had not been “manageable” against the effects of Apple’s privacy changes, thus leading the firm to lose US$10 billion in revenue.

The lawsuit alleged that Meta and its senior management “knowingly or recklessly failed” to tell investors that Apple’s iOS privacy changes were having a material impact on Meta’s ability to offer the type of targeted advertising that its customers wanted and, as a result, customer ad spending was “dropping precipitously”. It added that Meta’s mitigation efforts were either not properly implemented or ineffective and that Meta’s measurement of ads was not accurate as mitigation efforts were failing. At the same time, the lawsuit accused Meta of not having a plan in place to properly address the impact of the iOS privacy changes.

Meta is not the only company facing lawsuits this year. Recently, Impossible Foods sued plant-based food startup Motif FoodWorks for patent infringement, claiming that Motif copied its heme technology for imitating the taste of real meat. According to the lawsuit seen by MARKETING-INTERACTIVE, Motif's version of heme, also known as Hemami, uses bovine myoglobin as its source and uses a similar process to create the ingredient which is then used in beef substitutes. According to the lawsuit, Motif is and also has allegedly been aware that the inclusion of Hemami in meat replica products is a violation of Impossible Foods’ patent rights and has touted Hemami as a substitute for Impossible Foods’ patented technology in its marketing communications.

Meanwhile, Cartier filed a lawsuit against Tiffany and Co. earlier this month for allegedly stealing its trade secrets. According to the lawsuit, its investigation led to the discovery of "Tiffany’s disturbing culture of misappropriating competitive information". Tiffany's senior and mid-level management allegedly used quick money and title advancement to lure an under-qualified employee, only listed as Marino, away from Cartier. Upon hire, Tiffany's president for the Americas met with the employee to obtain "highly valuable, detailed confidential information" that would foster unfair competition. The lawsuit seeks an injunction requiring that Tiffany return and not use stolen trade secrets, plus unspecified damages. Cartier has also filed a claims lawsuit against Marino for disclosing its confidential information and trade secrets despite signing a non-disclosure agreement during her employment at the company. 

Photo courtesy: 123RF

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