A comprehensive investigation by Reuters has put a price tag on Meta’s tolerance for ad fraud: billions of dollars annually. For Rob Leathern, a former Meta executive who led the company’s business integrity operations until 2019, the findings reveal a stark tension between revenue growth and consumer harm.
Article contents:
- Introduction
- Shocking figures from the investigation
- The China connection and export of fraud
- Internal decisions: Revenue first
- Reinstating banned agencies
- The human cost of fraud
- The role of AI in complicating the landscape
- Frequently asked questions
Introduction
The report found that Meta generated nearly $18 billion in ad revenue from China in 2024, about 10% of its global revenue, even though internal documents showed that nearly a fifth of that (roughly $3 billion) came from ads linked to scams, illegal gambling, pornography, and other prohibited activities.
Shocking figures from the investigation
Meta internally classified China as the largest “fraud-exporting country,” accounting for 25% of all prohibited and fraudulent product ads globally. Although Meta’s core social platforms (Facebook, Instagram, WhatsApp) are banned in China, the company still makes billions from Chinese advertisers targeting global users. Leathern told Fortune magazine that the investigation highlights numerous problems, noting that a number of Meta’s business partners do not act ethically.
The China connection and export of fraud
Reuters reports indicate that the issue of China-linked fraud at Meta is not a marginal case, but rather a profitable and well-known part of its advertising business. According to internal estimates, Meta served up to 15 billion “high-risk” fraudulent ads daily, generating about $7 billion annually. The company required a 95% confidence threshold before banning fraudulent advertisers; those falling below that percentage were often allowed to continue operating.
Internal decisions: Revenue first
Internal decision-making was explicit. When enforcement staff proposed shutting down fraudulent accounts, internal documents showed they sought confirmation that growth teams would not object “given the revenue impact.” When asked whether Meta would punish high-spending Chinese partners running scam operations, the answer was reportedly “no,” citing the “high revenue impact.” Internal assessments indicated that revenue from risky ads “will certainly outweigh the cost of any regulatory settlement,” treating fines as part of the cost of doing business.
Reinstating banned agencies
In late 2024, Meta reinstated 4,000 second-tier Chinese ad agencies that had been previously suspended, unlocking $240 million in annual revenue, nearly half of which was tied to ads violating Meta’s safety policies. The investigation showed that more than 75% of harmful ad spending came from accounts benefiting from Meta’s partner protections.
The human cost of fraud
The human cost is already clear. Reuters documented victims across North America and Asia, including American and Canadian investors who lost their life savings to fake stock and cryptocurrency ads. Meta’s internal safety staff estimated that the company’s platforms are “implicated” in about a third of all successful scams in the United States, associated with consumer losses exceeding $50 billion.
The role of AI in complicating the landscape
The problem is exacerbated by generative AI lowering the barrier for fraudsters. Leathern said: “You can create something that looks plausible much easier than before. The speed and capability of criminals and their use of AI tools make the environment much more difficult.” Leathern believes platforms like Meta have not been transparent enough about how they use the same tools to fight abuse.
Frequently asked questions
Q: How does Meta make money from China if it is banned there?
A: By selling ad space to Chinese companies looking to market their products to users outside China (in America, Europe, and the Middle East).
Q: What are the types of fraudulent ads?
A: They include fake cryptocurrency investments, counterfeit products, and phishing sites to steal financial data.
Q: Does Meta fight these ads?
A: Meta says it fights them and has specialized teams, but the investigation indicates it sometimes turns a blind eye to preserve the massive revenues coming from these ads.
