Regulators Face Mounting Pressure Over Meta's Role in Facilitating Share Market Scam and Deceptive Advertising

The FTC and SEC are facing fresh scrutiny after two prominent US legislators revealed that Meta Platforms (META) may be profiting substantially from fraudulent advertising campaigns. According to internal documents obtained by Reuters, the tech giant could be generating approximately $16 billion annually—roughly 10 percent of its 2024 revenue—from ads connected to scams and restricted products. On a semi-annual basis, Meta reportedly earns around $3.5 billion specifically from “elevated-risk” deceptive advertisements.

The Scale of Meta’s Scam Problem

The evidence paints a troubling picture of how extensively Meta’s platforms—Facebook and Instagram—have become vehicles for illicit commercial activity. Senators Josh Hawley and Richard Blumenthal’s correspondence with federal regulators highlights that Meta itself estimated one-third of all share market scam and fraud schemes in the United States operate through its services. Despite this knowledge, the platforms’ anti-fraud mechanisms appear insufficient, with numerous deceptive ads slipping through detection systems.

A review of Meta’s own advertising library reveals persistent scam content remains readily accessible to users. This includes counterfeit investment opportunities, fraudulent cryptocurrency schemes, fake gambling platforms, synthetic intimate content services, and spurious government benefits offers. The senators expressed particular alarm over sophisticated political scams featuring deepfake videos impersonating elected officials—a development with potential implications for election integrity.

Corporate Response vs. Regulatory Demands

Meta has contested these allegations, claiming a 58 percent reduction in scam reports over the past 18 months. The company characterized the lawmakers’ accusations as exaggerated. However, critics argue that Meta’s security infrastructure has weakened precisely when it should strengthen, noting the company has reduced its trust and safety personnel while simultaneously increasing artificial intelligence spending.

Hawley and Blumenthal contended that if the allegations prove accurate, Meta warrants substantial penalties, including forced return of illicit profits and enhanced regulatory oversight. The senators referenced FTC data indicating Americans collectively lost exceeding $158 billion to various scam operations last year, underscoring the broader societal impact of inadequate platform governance.

International Dimensions and Stock Performance

The senators also identified connections between many fraudulent advertising campaigns and overseas cybercriminal organizations, suggesting that Meta’s moderation failures have global security ramifications. The regulatory pressure appears to have had limited market impact thus far—META closed regular trading at $613.05, reflecting a 3.16 percent gain, with after-hours trading at $614.02, up 0.16 percent on NasdaqGS.

Disclaimer: This analysis represents market observation and does not constitute investment advice. Stock movements and regulatory developments should be independently verified.