scorecardFacebook’s fake crypto ads are being taken to court by Australian billionaire Andrew Forrest
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Facebook’s fake crypto ads are being taken to court by Australian billionaire Andrew Forrest

Facebook’s fake crypto ads are being taken to court by Australian billionaire Andrew Forrest
Investment4 min read
Criminal case filed against Facebook for allowing fake crypto ads on its platform by Australian billionaire Andrew Forrest    BI India
  • In more bad news for Facebook, Australian billionaire Andrew Forrest has filed a criminal case against the company.
  • He alleges that Facebook broke anti-money laundering laws by showcasing fake crypto investment schemes that used his face in ads that led people getting conned.
  • The billionaire claims he has spent ‘hundreds of thousands of dollars’ over the last three years trying to dissociate himself from these ads.
Cryptocurrency scammers have been using the names of bigwig celebrities and influencers in ads without getting any kind of consent to con people out of money. And, Australian billionaire Andrew Forrest has had enough.

“I’m concerned about innocent Australians being scammed through clickbait advertising on social media. I’m acting here for Australians but this is happening all over the world.”

Andrew Forrest in a statement on February 3

Forrest has filed a criminal case, stating that Facebook was “criminally reckless” for allowing ads that fraudulently portray him and other celebrities which are endorsing crypto scams.

According to the court documents, one person had lost $670,000 because of an ad featuring Forrest’s “endorsement”. However, the overall problem is much bigger. Data compiled by A Scamwatch cites that Australians lost $29.2 million (AUD) to cryptocurrency “investment scams” in the first half of 2021 alone.

These unauthorised endorsements go beyond just Forrest. Others like Kate Winslet, Hugh Jackman, Nicole Kidman, Richard Branson, Elon Musk, Bill Gates and other celebrities have been spotted in fraudulent advertisements over the past three years.

Prior actions and impact of scams

Back in November 2019, Forrest had sent an open letter about the same issue to Mark Zuckerberg, then-CEO of Facebook. But his warning was barely heeded. Six months down the line, at least the Australian financial watchdog warned people to be cautious of fraudulent crypto sites with celebrity testimonials.

Forrest’s lawyers said that he has spent “hundreds of thousands of dollars” since March 2019 to dissociate himself from this scam. His lawsuit alleges that Facebook “knowingly profits from this cycle of illegal ads”, and that it “breaches anti-money laundering laws,” at least in Australia.

The legal proceedings will begin at the end of March.

According to Forrest, this is the first time that Facebook has faced criminal charges anywhere in the world. A private individual suing a company is unusual in Australia, but if found guilty, the court may levy fines or even compel Facebook to change its advertising mechanism in the country — for good.

Who is Andrew Forrest?

Forrest is the chairman of mining company Fortescue Metals Group, which is based in Western Australia with a market cap of over $45 billion.

In a statement, he said that tracking down the scammers themselves is not easy, as they are mostly overseas. He stated that his intent is deterring Facebook “from allowing itself to be used as an instrument of crime.”

Facebook has not commented on Forrest’s case specifically, as it was “a potentially active legal matter.” However, it did clarify that, “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.”

Notably, social media companies find it difficult to filter some ads submitted to them, due to a practice called “cloaking,” described by GeoEdge, an ad-security firm. Simply put, cloaking is a technique used by scammers to show different content to internal ad reviewers and to ad viewers, thus bypassing checks of the type that Forrester would like.

A couple of months ago, a Check Point Research report described how scammers used Google Ads to steal almost half a million dollars’ worth of cryptocurrency. The blockchain tracking firm Chainalysis had found in January 2022, that millions of Indians had visited crypto scam websites. In response, the UK government plans new laws to prevent misleading cryptocurrency advertisements.

More bad news for Facebook

The criminal case comes on the footsteps of Facebook seeing a fall in daily users for the first time ever in its history, according to its third quarter results. Meta Networks revealed that Facebook’s daily active users (DAUs) clocked in at 1.929 billion between October to December as compared to 1.930 billion in the previous quarter.

The company also revealed that it’s wary of revenue growth slowing down in the coming year. On the one hand, there is growing competition from other social platforms like TikTok and YouTube and, on the other, advertisers are cutting on their ad-spend.

The company’s share price dipped by more than 20% as the market closed on Wall Street, wiping out around $200 billion of Meta’s market value.

Due to Meta's influence on the market, the stock prices of companies like Twitter, Snap and Pinterest were also seen falling sharply.