The Australian Competition and Consumer Commission (ACCC) has launched Federal Court proceedings against Facebook owner Meta Platforms, Inc. and Meta Platforms Ireland Limited (Meta), alleging Meta engaged in false, misleading, or deceptive conduct through publishing scam advertisements featuring prominent Australians.
The ACCC argues that Meta’s conduct places it in violation of the Australian Consumer Law (ACL) or the Australian Securities and Investments Commission Act (ASIC Act). It is further alleged that Meta aided and abetted or was knowingly involved in misleading conduct or false representations by the advertisers.
Background to Scam Advertisements
The advertisements in question promoted investment in cryptocurrency or money-making schemes and were published on Facebook in 2019. They featured well-known Australian figures such as businessman Dick Smith, tv presenter David Koch, mining billionaire Andrew “Twiggy” Forrest, and the former NSW premier Mike Baird. However, the schemes were scams and the people featured in them had not approved or endorsed them.
Through accessing links in the ads, Facebook users were taken to a fake media article that included quotes attributed to the public figure featured in the ad endorsing a cryptocurrency or money-making scheme. After being invited to sign up to the scheme, users were contacted by scammers who used high pressure tactics to convince users to invest in the fake schemes.
The ACCC alleges that the ads were likely to mislead Facebook users into believing the advertising schemes were endorsed by the prominent Australians featured in them.
Meta’s Alleged Misleading Conduct or False Representations
The ACCC allege that Meta failed to take sufficient steps to address the scam ads, despite becoming aware of them. Even after public figures had complained about their names and images being used in similar ads without their consent, the cryptocurrency scam ads remained on Facebook.
Meta’s responsibility for advertisements published on its platform is central to the ACCC’s case. Meta uses algorithms to enable advertisers to target users who are most likely to access an ad’s landing page by clicking on a link in the ad. Further, Facebook generates substantial revenue from its targeted ad model.
Former ACCC Chair Rod Sims argues that Meta’s technology enabled the ads to target certain users, despite assurances that it would detect and prevent spam on Facebook. He notes the substantial loss suffered by consumers who were directed to sign up to scam investment opportunities by the ads, including one consumer who lost over $650,000.
The ACCC is seeking declarations, injunctions, penalties, costs, and other orders in the proceedings.
What to expect from the Federal Court proceedings?
The ACCC is commencing the proceedings under the misleading and deceptive conduct provisions in the ACL. In the alternative, the court may consider that the conduct involved financial services and falls outside the scope of the ACL, so the ACCC is also invoking the consumer protection provisions in Pt 2 of the ASIC Act. The Australian Securities and Investments Commission has delegated powers to the ACCC for the purpose of these proceedings, highlighting current uncertainty over the classification and regulation of cryptocurrency.
This matter provides an opportunity for the Federal Court to determine how consumer protection law applies to a new form of currency. In February 2022, Andrew Forrest commenced criminal proceedings against Meta for allowing cryptocurrency scam ads to use his identity on Facebook. However, these proceedings concern different questions of law. If the ACCC are successful, digital platforms will need to consider their ad models and responsibility for ads published on their sites.
The ACCC media release is available here.