Meta estimates that it earns 10% of its revenue from scams, report says

Meta may have generated up to $16 billion in annual revenue from fraudulent advertisements on its platforms, according to internal company documents obtained by Reuters.

The report alleges that 10% of Meta’s overall annual revenue in 2023 came from ads promoting illegal gambling, investment scams, and banned medical products — all of which violate the company’s own advertising policies.

Three Years of Missed Protections

The documents suggest that for three consecutive years, Meta’s systems failed to adequately shield users from deceptive or criminal ad campaigns circulating on Facebook and Instagram. These ads often posed as legitimate businesses or services to lure unsuspecting users into financial scams or fake purchases.

According to the report, Meta’s internal detection system assesses the probability that an advertiser is running a scam. However, the company reportedly only deactivates advertiser accounts when there is a 95% confidence level of fraud — a threshold critics argue is far too high to protect users.

Image Credits: Facebook (Screenshot by Reuters)

When the likelihood of fraud is below that threshold, Meta allegedly employs a controversial tactic: it charges higher advertising fees to discourage potential scammers. Yet when those advertisers proceed regardless, Meta still profits from their spending, inadvertently benefiting from the very activity it claims to prevent.

Meta’s Response

TechCrunch reached out to Meta for comment but did not receive a response before publication. In comments to Reuters, Meta spokesperson Andy Stone criticised the interpretation of the leaked documents, stating that they “present a selective view that distorts Meta’s approach to fraud and scams.”

Stone also claimed that Meta has made significant improvements in reducing scam activity, stating that in the past 18 months, the company has achieved a 58% drop in user reports of fraudulent ads and removed more than 134 million scam advertisements across its platforms.

Despite these efforts, the report raises serious questions about Meta’s ad moderation systems, corporate incentives, and the company’s reliance on automated ad approval mechanisms, which allow bad actors to exploit its vast digital ecosystem.

A Growing Pattern of Scrutiny

The revelations arrive as Meta faces increased global scrutiny over its advertising ethics, data privacy policies, and the spread of harmful content. Regulators in both the European Union and the United States have intensified investigations into the platform’s handling of disinformation and consumer protection, particularly in light of new AI-driven ad targeting tools that further complicate oversight.

While Meta maintains that its advertising system is improving, critics argue the company’s business model — which prioritises scale and automation — inherently exposes users to risk.