• A bipartisan coalition of 42 state attorneys general sent a letter to Meta demanding immediate action against investment scam advertisements running on Facebook and other platforms
• Scam ads use images of well-known investors to lure users into “pump and dump” schemes through WhatsApp groups, with some victims losing their entire life savings
• California AG Rob Bonta calls Meta’s detection systems “inadequate” and urges company to either fix the problem or ban all investment ads from its platforms
A bipartisan coalition of 42 attorneys general led by California’s Rob Bonta is demanding Meta take immediate action to combat a surge of investment scam advertisements plaguing Facebook and its other platforms, warning that the company’s current detection systems are failing to protect users from schemes that have cost some victims their life savings.
The attorneys general sent a letter to Meta expressing “deep concern” about the proliferation of fraudulent investment ads that use images of well-known investors to deceive consumers.
These sophisticated scams direct users to download WhatsApp and join groups falsely claiming affiliation with prominent investors, then target them with illegal “pump and dump” schemes involving penny stocks.
“It’s alarming to see how easy investment scam ads — which have cost some consumers their life savings — can be created and disseminated on Meta platforms,” said Bonta in a news release. “This growing trend, combined with Meta’s inadequate method of identifying these ads and its significant delay in removing them, makes this a recipe for disaster.”
Penny stocks can cost big bucks
The scam operates by encouraging users to invest in penny stocks, artificially inflating the stock price before scammers quickly sell their holdings, leaving victims with worthless investments they cannot recover. The attorneys general note that beyond devastating financial losses, victims suffer significant psychological and social consequences.
Despite Meta’s use of automated systems and occasional human review to detect and remove fraudulent advertisements, the attorneys general argue these measures are insufficient, allowing “vast numbers of scam ads to get through to publication.”
The coalition is urging Meta to either adopt proper protocols to tackle the issue or ban all investment advertisements from its platforms entirely.
This latest action represents the most recent criticism of Meta’s content moderation practices. In 2023, Attorney General Bonta joined a bipartisan lawsuit against Meta over harmful features on Instagram and Facebook that allegedly addict children and teens. Last year, he also sent a letter expressing concern about inadequate responses to account takeovers and lockouts on the platforms.
