Meta adds crypto scams to the list of reasons people are threatening it with legal action

Thailand is gunning for Meta on the back of 200,000 people falling victim to fraud on Facebook, including crypto scams.

The nation’s digital economy and society minister, Chaiwut Thanakamanusorn, lashed out against the Facebook owner on Monday, saying he will seek a court order to cut off the company’s flagship platform’s services in the country.

He claimed the firm had failed to prevent scammers from buying ads and deceiving people into investing in fraudulent schemes, and made the threat to ban the platform after discussions with the company to curb the wave of scams yielded few results.

If CEO Mark Zuckerberg’s social media empire wishes to avoid the ban, then it must prove that it can act responsibly, Chaiwut said.

The threat of a Thailand ban is the latest in a long string of regulatory setbacks for Meta.

Lawmakers and regulators have increasingly put the screws to Meta in the wake of the Cambridge Analytica scandal, where a British data firm harvested data from 87 million Facebook profiles and used the information to influence the 2016 US presidential election and the Brexit referendum.

Since then, politicians, pundits and market watchdogs have hounded Meta, hurling a barrage of lawsuits, antitrust fines, and accusations of data privacy law violations against the tech titan.

A further threat to the social media giant’s ads-based business model is a string of new laws introduced across the globe.

Crypto frauds on Meta’s platforms

This is not the first time Meta has been forced to tackle concerns about crypto frauds running rampant on its platforms.

In 2018, it introduced a short-lived ban against crypto companies advertising on Facebook, because so many of them turned out to be fraudulent.

However, Meta reversed the ban in December 2021. Those that wished to run ads could now apply as long as they had one of 27 eligible licences.

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Technically, crypto companies require prior approval from Meta to advertise, but with anyone able to post an ad on Facebook easily, it appears fraudsters can slip through the cracks.

In June 2022, the US Federal Trade Commission called social media and crypto a “combustible combination for fraud” and claimed “nearly half the people who reported losing crypto to a scam since 2021 said it started with an ad, post, or message on a social media platform.”

Of these, 67% are attributable to Meta’s Instagram, Facebook and Whatsapp platforms, according to the FTC.

This summer, British bank TSB warned that Meta’s failure to introduce interventions against scams could cost UK households £250 million in 2023 alone.

That said, overall losses from crypto scams appear to be down both last year and this year.

Scammers took just over $1 billion in the first half of 2023, less than a quarter of the $4.3 billion stolen during the first six months of 2022, according to Chainalysis.

In Malaysia, grifters stole $71 million through scams between January and May this year, according to the Malaysia Communications and Multimedia Commission.

Individuals have also tried to engage with Meta to do something about this problem.

UK financial journalist and money management expert Martin Lewis sued Facebook in 2018 for defamation following scams using his name and image to promote their schemes. As part of a settlement, the company agreed to donate $3.9 million to set up a new anti-scam project.

It’s difficult to see if it has had any success. In Thailand’s case, the Ministry of Digital Economy and Society is now also asking its citizens to educate themselves about avoiding scams, publishing a list of signs you could be getting conned.

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It’s urging people to avoid products and companies that advertise high returns in a short period of time, guaranteed returns, use pictures of famous people to increase their credibility, can’t verify their business plans or financial information and offer incentives to invest as quickly as possible.

The advice echoes warnings that crypto scammers are increasingly impersonating celebrities and law enforcement personalities to steal victims’ money.

Meta is under siege

Fundamentally, Meta’s business model is under siege. As Zuckerberg told a US senator during a 2018 hearing, “We run ads.”

Advertisement revenue is how Facebook has been able to run free of charge for almost two decades.

The company has poured billions into targeting users with laser-focused ads, tailored to their interests and individual journeys across the interwebs.

Meta has been able to do that by the use of cookies, which track what sites and products users look at. That model is now threatened by politicians, regulators, and other tech companies.

In 2021, Apple introduced a new update to its iPhone operating system which enabled users to block Facebook from doing that sort of tracking, much to the chagrin of Zuckerberg.

Data collection is, of course, at the core of Meta’s business model. So the growing string of data protection fines fired off against Facebook should rattle the executives in Menlo Park.

In the last year alone, the company has been fined $23 million by South Korean regulators, $14 million in Australia, and a record $1.3 billion penalty by the Irish data protection regulator for violating data privacy laws. Norway has fined Meta $99,000 a day since August 14 for privacy violations against its citizens. In legal proceedings today, Meta asked for a temporary injunction against the daily fines.

At the same time, market watchdogs — particularly the European Commissioner for Competition Margrethe Vestager — have launched a barrage of antitrust cases against the Silicon Valley tech giant.

Meta offered an olive branch to the EU on August 1 by seeking consent for targeted ads from EU users. And today, in an article by its president of global affairs Nick Clegg, Meta revealed that users in Europe would be able to see Reels and Stories without content ranked by its recommendation algorithms.

The changes came in response to the EU’s new Digital Services Act, which could further restrict the free rein Meta has enjoyed for years.

Meanwhile, new laws in Canada and Australia have forced Meta to pay news organisations for using their content. In response to the Canadian laws, Meta has decided to restrict news access to Facebook and Instagram users in the country.

Over the past few years, Zuckerberg and his underlings have also frequently been dragged in front of the US Congress to testify about the company’s alleged shortcomings in preventing fraud, human trafficking, and protecting children from harm — spurred on by allegations by whistleblower Frances Haugen.

Meta did not immediately return requests for comment.

Callan Quinn, DL News’ Hong Kong-based Asia correspondent, covers the crypto industry in the region. Have a tip? Contact the author at callan@dlnews.com.