State AGs Urge Meta to Clean Up Platform

Introduction to the Issue

A group of 42 state attorneys general are calling on Meta to curb the rise of investment scams on Facebook that fraudulently use the images of Warren Buffett and other famous figures, New York Attorney General Letitia James said Wednesday. James said in a news release criminals are consistently evading Meta’s automated and human review systems to post fake ads that leave retail investors saddled with millions of dollars in losses.

The Nature of the Scams

The ads, touting access to Buffett, Elon Musk or Ark Invest’s Cathie Wood, lure Facebook users to join chat groups on Meta-owned messaging platform, WhatsApp, according to the New York AG. There, users are unwittingly involved in alleged pump-and-dump schemes, where criminals boost the price of thinly traded stocks and quickly sell for a profit, leaving small investors with losses.

Meta’s Struggle to Control Scams

Meta, the parent company of Facebook, Instagram and WhatsApp, is struggling to control the rise of cyber scams on its platforms and is a "cornerstone of the internet fraud economy," the Wall Street Journal reported last month. The problem is global in nature, with one notable lawsuit being brought by an Australian billionaire who alleges that Meta’s artificial intelligence-run advertising program created and amplified false ads using his likeness.

Call to Action by Attorney Generals

"Thousands of Facebook users have lost hundreds of millions of dollars to these scams and Meta must do more to stop these fraudulent ads from running on its platforms," James said. "I am leading a bipartisan coalition calling on Meta to step up its review of ads to stop these scams. I also urge all New Yorkers to be extra careful before putting their money in investments they see advertised on social media." The AGs urged Meta to boost its policing of ads, including with more human review, saying that unless they curb the scams, Meta should stop running investment ads altogether.

Response from Meta

Andy Stone, a spokesman for Meta, said that addressing scams on its platforms requires collaboration between banks, governments, law enforcement and telecom companies. "We’re committed to doing our part: Investing in technology to aggressively enforce against scams, including testing the use of facial recognition technology, empowering people to protect themselves with on-platform warnings and tools, educating consumers on common schemes and forging partnerships across tech, banking and beyond to protect people from these criminals," Stone said.

Conclusion

The issue of investment scams on social media platforms, particularly those using the images of famous figures like Warren Buffett, is a serious concern that requires immediate attention and action from companies like Meta. The call to action by the 42 state attorneys general for Meta to enhance its review of ads and curb these scams is a critical step towards protecting retail investors from significant financial losses.

FAQs

Q: What is the nature of the investment scams on Facebook?

A: The scams involve fake ads that use the images of famous figures like Warren Buffett, Elon Musk, or Cathie Wood to lure Facebook users into joining chat groups on WhatsApp, where they are involved in alleged pump-and-dump schemes.

Q: How much have Facebook users lost to these scams?

A: Thousands of Facebook users have lost hundreds of millions of dollars to these scams.

Q: What is Meta’s response to the issue?

A: Meta has stated its commitment to addressing scams on its platforms through investing in technology, empowering users, educating consumers, and forging partnerships with other industries.

Q: What are the attorney generals calling on Meta to do?

A: The attorney generals are calling on Meta to boost its policing of ads, including with more human review, and to stop running investment ads altogether if the scams cannot be curbed.

Q: Is this a global issue?

A: Yes, the problem of cyber scams on social media platforms is global in nature, with cases reported in various parts of the world.