Meta’s former chief integrity officer says new report reveals ‘disappointing’ ad fraud epidemic at tech giant
A massive Reuters investigation assessed Meta’s tolerance for ad fraud: billions of dollars per year. For Rob Leathern, a former Meta executive who led the company’s business integrity operations until 2019, the findings reveal a strong tension between revenue growth and consumer harm.
The report, released Monday, found that Meta generated about $18 billion in advertising revenue in China in 2024, or about 10% of its global revenue, although internal documents show that nearly a fifth of that amount (about $3 billion) came from ads linked to scams, illegal games, pornography and other prohibited activities. Meta has internally called China the top “scam exporting country,” accounting for 25% of all fraudulent advertisements and banned products worldwide, according to the report.
Meta’s main social media platforms (Facebook, Instagram, WhatsApp) are blocked in China, but the company still makes billions from Chinese advertisers targeting users around the world.
The investigation, Leathern said Fortunehighlights several issues with Meta and the Chinese ad market as a whole. “It appears that a number of Meta’s business partners are not conducting themselves ethically and/or some employees of these companies are not doing what they are supposed to do,” he said. “It’s quite telling that Meta has deleted their entire partner repertoire, which obviously means they need to review their partners, and there are a lot of them.”
“Scams are increasing across the Internet, driven by persistent criminals and sophisticated organized crime syndicates who are constantly evolving their schemes to evade detection. We work to eradicate them using advanced technical measures and new tools, disrupting criminal scam networks, working with industry partners and law enforcement, and raising awareness of fraudulent activity on our platforms. And when we determine that bad actors have violated our rules prohibiting fraud and scams, we are taking action,” a Meta spokesperson said. Fortune in a statement.
Meta communications chief Andy Stone, however, pushed back on the investigation, posting on Threads: “Once again, Reuters is misinterpreting and distorting the facts. He argued that the “pivot of CEO Mark Zuckerberg’s integrity strategy,” which included asking China’s ad enforcement team to “pause” its work, was about improving the teams’ goals and “asking them to step up their efforts to combat fraud and scams globally, not just in specific markets.”
Stone also claimed that these teams have “doubled down on reducing fraud and scams and that over the past 15 months, user reports of fraudulent ads have decreased by more than 50%.”
The revelations published by Reuters echo, but far exceed, the AI-driven deepfake scheme earlier this year involving Goldman Sachs, in which scammers used AI-generated videos of investment strategist Abby Joseph Cohen to lure retail investors into fraudulent WhatsApp groups via Instagram ads.
Reuters reporting suggests that Meta’s China-related scam problem is not a borderline case or blind spot, but an allegedly well-known and lucrative segment of its advertising business.
According to internal estimates cited by Reuters, Meta served up to 15 billion “high-risk” fraudulent ads every day, generating about $7 billion a year. The company required a 95% trust threshold before banning fraudulent advertisers; those that fell below were often allowed to continue operating, sometimes at higher rates. Meta also established a revenue “guardrail” of 0.15% (about $135 million) as the maximum revenue it was willing to forgo to combat suspect ads, even though it earned $3.5 billion every six months from ads deemed to carry “higher legal risk.”
Internal decision making was explicit. When law enforcement agencies proposed closing the fraudulent accounts, internal documents reviewed by Reuters showed they sought to ensure growth teams would not object “given the revenue impact.” Asked whether Meta would penalize high-spending Chinese partners who engage in scams, the answer was reportedly “No,” citing “high revenue impact.” Internal assessments reportedly indicated that revenues generated from risky advertising would “almost certainly exceed the cost of any regulatory settlement,” effectively viewing fines as a cost of doing business.
By the end of 2024, Meta reinstated 4,000 second-tier Chinese ad agencies that had previously been suspended, freeing up $240 million in annualized revenue, about half of which was tied to ads violating Meta’s own security policies, according to the investigation. According to Reuters, more than 75% of harmful ad spend came from accounts with Meta partner protections. The company also disbanded its China-focused anti-scam team.
An external audit commissioned by Meta from the Propellerfish Group came to a stark conclusion when investigating fraud and scams on the platform: Meta’s “own behavior and policies” were enabling systemic corruption in the Chinese advertising ecosystem. Reuters reported that the company largely ignored the results and expanded its operations anyway.
Leathern, who reviewed the reports and internal figures referenced in the report, said Fortune the scale of the problem was difficult to defend. “I was disappointed that the violation rates for China-specific advertisers were as high as last year,” he said. “It’s disappointing because there are ways to bring it down.”
His critique goes to the heart of the failure. Platforms, he said, should hold intermediary agencies accountable for the quality of advertisers they recruit. “If you measure breach rates coming from certain partners and those rates are above a threshold every quarter or year, you can simply fire your worst-performing customers,” he said.
“I think it’s important for us to have some sense of transparency about how policies are enforced and what companies are doing to reduce scams on their platforms,” Leathern added.
Over the past 18 months, Meta has removed or rejected more than 46 million ads placed through so-called resellers, or large Chinese advertising companies. And more than 99% of ad accounts associated with resellers that violated the company’s fraud policies were proactively detected and disabled.
Besides the need for transparency, Leathern warned that prioritizing short-term revenue over trust ultimately threatens the business itself. “If people don’t trust advertisers and advertising, it reduces the effectiveness of that channel for all advertisers,” he said. “Their business faces many risks, direct and indirect, if it does not do a sufficient job to stop the scams. »
The human cost is already visible. Reuters has documented victims in North America and Asia, including U.S. and Canadian investors who lost their savings to fake crypto stocks and ads, Taiwanese consumers misled into buying counterfeit health products, and a Canadian Air Force recruiter whose Facebook account was hacked to run crypto scams. Meta’s internal security staff estimated that the company’s platforms were “involved” in about a third of all successful scams in the United States, linked to more than $50 billion in consumer losses.
The problem is intensifying as generative AI lowers the barriers for fraudsters. “You can create something that seems plausible much more easily than ever before,” Leathern said. “The speed and adaptability of criminals and their use of AI tools only makes the environment much more challenging. »
Still, Leathern said platforms like Meta haven’t been transparent enough about how aggressively they use these same tools to combat abuse. “We just don’t have a lot of information about what they’re doing to reduce scams and fraud through advertising,” he said.
For Leathern, the investigation should be a turning point. “I hope they see this as an opportunity to make things better for people,” he said.
