Whistleblower-supported reports allege Meta chose profit over policing, allowing scams to thrive on Facebook and Instagram at a premium price.

Meta Platforms, the parent company of Facebook and Instagram, is facing a massive crisis of trust after an investigative report revealed that the social media giant knowingly allowed billions of dollars in advertising fraud, primarily originating from mainland China, to flourish on its platforms.

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Internal Meta documents, reportedly obtained by journalists, suggest the company deliberately softened its enforcement against policy-violating ads—including blatant financial scams—to protect a significant and growing portion of its annual revenue.

The $16 Billion Trade-Off

The core of the allegation points to a shocking internal calculation: that revenue derived from scams and policy-violating ads was expected to contribute approximately 10% of Meta’s overall annual revenue, translating to a projected $16 billion in one recent period.

The reports indicate that instead of immediately banning these fraudulent actors, Meta employed a systemic workaround designed to monetize the illicit activity.

Crucial Finding: Internal policies reportedly outline a “penalty bid system,” where known high-risk accounts are not suspended but are instead charged a significantly higher advertising rate. This mechanism effectively converted fraudulent advertising into a highly lucrative, premium revenue stream for the company.

China: The Engine of Ad Fraud

China has emerged as a crucial revenue stream for Meta, despite its platforms being blocked domestically. Chinese businesses advertising to global markets reportedly account for over 11% of Meta’s total revenue.

The investigation highlights that major Chinese ad agencies and resellers—crucial partners for Meta—openly facilitated the creation of ad accounts intended specifically for running banned content and scams. Critics suggest that Meta’s reliance on these key partners led to a deliberate failure to enforce strict “Know Your Customer” policies, a measure taken by rivals like Google and TikTok.

Erosion of Trust and Advertiser Backlash

The revelations are expected to trigger a severe backlash from legitimate advertisers. Industry analysts are already predicting widespread concern that honest companies are paying a “fraud tax,” being forced to bid higher prices (CPMs) in an ad auction polluted by fraudulent, subsidized actors.

Furthermore, Meta’s own advanced AI tools, such as the Advantage+ advertising system, reportedly amplified the problem by testing and promoting the most effective scam ad variants, directing more spending toward policy-violating campaigns.

Regulatory Scrutiny Intensifies

The company now faces an increased threat of global regulatory action. Governments and financial watchdogs are expected to investigate whether Meta adequately disclosed its dependency on this high-risk revenue stream to investors. Calls are likely to intensify for the company to compensate victims of scams facilitated by the platform and for new legislation mandating greater transparency in digital advertising.

While Meta has publicly stated its commitment to fighting scam networks using “advanced technical measures,” the release of internal documents showing the deliberate monetization of these schemes contradicts the company’s public stance, setting the stage for a prolonged legal and public relations battle.