ACCC and ASIC join forces to pursue the social media giant through the Federal Court over allegations of false, misleading or deceptive conduct
The Australian Competition and Consumer Commission (ACCC) is lining up alongside Twiggy Forrest and taking Facebook parent company, Meta, to court for publishing scam celebrity cryptocurrency advertising on its platform.
The regulatory watchdog last week confirmed it had instituted Federal Court proceedings against the two businesses making up Meta - Meta Platform and Meta Platforms Ireland – alleging the business engaged in false, misleading or deceptive conduct by publishing scam advertisements featuring high-profile Australia business entrepreneurs and public figures.
The advertisements included familiar faces such as Dick Smith, David Koch and former NSW premier, Mike Baird and all promoted money making and cryptocurrency schemes. And all were scams, with none of the figures appearing approving or endorsing the advertisements. The ads linked through to fake sign-up pages where scammers used high-pressure tactics such as repeated calls to convince consumers to deposit funds into the fake schemes.
The ACCC is alleging Meta’s conduct is in breach of Australia’s Consumer Law or the Australian Securities and Investments Commission (ASIC) Act. It’s also alleging Meta aided and abetted or was knowingly concerned in false or misleading conduct and representations by the advertisers.
ACCC chair, Rod Sims, said the case is oriented around the allegation that Meta is responsible for the advertisements published on its platform and knowing about them, did not take sufficient steps to address the issue.
“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,” Sims stated.
“The celebrity endorsement cryptocurrency scam ads were still being displayed on Facebook even after public figures around the world had complained that their names and images had been used in similar ads without their consent.”
One of these public figures, Twiggy Forrest, has now launched legal proceedings directly against Meta himself, alleging the social media giant committed criminal offences by allowing the cryptocurrency scams to be advertised on its platform. This followed on from Forrest’s original open letter to Meta chief, Mark Zuckerberg, in November 2019, criticising him and the business for allowing the ads to run and use his identity on the platform
The ACCC said while both proceedings concern similar advertisements, its case is separate to Forrest’s and pertains to different questions of law. Given that the allegations could well extend beyond its remit, the ASIC has also delegated certain powers and functions to the ACCC in order to commence and conduct the proceedings.
“We allege that the technology of Meta enabled these ads to be targeted to users most likely to engage with the ads, that 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,” Sims said. “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.”
In just one example, Sims said one individual lost more than $650,000 to one of the scams that appeared via advertising on Facebook.
“Apart from resulting in untold losses to consumers, these ads also damage the reputation of the public figures falsely associated with the ads,” Sims continued. “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.”
The ACCC is seeking declarations, injunctions, penalties, costs and other orders.
The latest Federal Court proceedings are among a number the ACCC is pursuing against Facebook and Meta. Another, launched in December 2020, relates to Facebook allegedly misusing consumer data relating to a VPN app for marketing purposes.
Earlier in 2020, the watchdog also instigated proceeding pertaining to the Cambridge Analytica data breach scandal, which resulted in the private data of 300,000 Australian consumers being potentially disclosed for political profiling.
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