Meta charged suspected fraudsters premium rates while earning billions from scam ads

Internal company documents viewed by Reuters reveal that Meta internally projected earning approximately 10% of its 2024 annual revenue—roughly $16 billion—from advertisements promoting scams and banned goods. The November 6, 2025 report exposes a systematic approach to monetizing fraudulent advertising through a novel "penalty bid" program that charged suspected scammers premium prices rather than blocking them entirely.

According to the documents, Meta's platforms expose users to an estimated 15 billion "higher risk" scam advertisements daily. These advertisements show clear signs of being fraudulent, yet the company has implemented a 95% certainty threshold before banning advertisers outright. Below that threshold, Meta applies financial penalties by charging higher advertising rates, ostensibly to dissuade suspect advertisers while maintaining revenue streams.

The penalty bid program emerged as a centerpiece of Meta's scam reduction efforts during summer 2024, according to internal documents. Rather than removing advertisers flagged by automated systems as likely scammers, the company developed auction mechanics that forced them to pay premium rates. For Meta, the financial impact proved mixed: while the company would sell fewer scam ads, it would generate more revenue from those that cleared auctions, offsetting lost revenue.

Meta spokesman Andy Stone told Reuters that the penalty bid program aimed to reduce overall scam advertising by making suspicious advertisers less competitive in ad auctions. Testing showed both a decline in scam reports and a slight decline in overall advertising revenue following implementation.

Documents from between 2021 and 2025 spanning Meta's finance, lobbying, engineering and safety divisions reflect the company's efforts to quantify abuse while weighing enforcement costs against regulatory penalties. A 2024 strategy document indicated that Meta would only act against suspect advertisers in response to impending regulatory action rather than voluntary improvements.

The company placed restrictions on revenue loss from enforcement actions. According to a February 2025 document, the team responsible for vetting questionable advertisers wasn't allowed to take actions costing Meta more than 0.15% of total revenue in the first half of 2025—approximately $135 million out of $90 billion generated. Stone disputed this figure represented a hard limit, describing it as a revenue projection rather than a ceiling.

Internal presentations from May 2025 estimated Meta's platforms were involved in one-third of all successful scams in the United States. An April 2025 internal review of online communities where fraudsters discuss their trade concluded: "It is easier to advertise scams on Meta platforms than Google." The document didn't elaborate on the reasoning behind this assessment.

Meta executives presented CEO Mark Zuckerberg with what they termed a moderate approach to scam enforcement in October 2024, according to a strategy document. Rather than rapid crackdown, the company would focus efforts on countries facing near-term regulatory action. Following that meeting, executives settled on reducing the percentage of revenue attributable to scams, illegal gambling and prohibited goods from an estimated 10.1% in 2024 to 7.3% by end of 2025, then to 6% by end of 2026 and 5.8% in 2027.

Stone characterized the 10.1% figure as "rough and overly-inclusive," stating the company later determined the true number was lower because the estimate included "many" legitimate ads. He declined to provide an updated figure, citing the assessment's purpose as validating planned integrity investments.

The documents reveal Meta's advertising policies created enforcement blind spots. After Singapore police provided 146 examples of scams targeting that country's users in fall 2024, Meta staff found only 23% actually violated platform policies. The remaining 77% "violate the spirit of the policy, but not the letter," according to a Meta presentation. Deceptive marketing that Meta didn't act on included offers of 80% off designer fashion brands, fake concert ticket promotions, and job advertisements falsely claiming representation by major technology companies.

Small advertisers required at least eight flags for promoting financial fraud before Meta blocked them, according to a 2024 document. Larger spenders designated as "High Value Accounts" could accumulate more than 500 strikes without shutdown, other documents show. Four fraudulent advertising campaigns removed earlier this year had been responsible for $67 million in monthly advertising revenue.

An employee initiative launched earlier this year began issuing weekly reports highlighting the "Scammiest Scammer"—whichever advertiser had earned the most user complaints about scams in the past week. Reuters checked five accounts cited in one report and found two remained active more than six months later, including one running advertisements for unlicensed online casinos. After Reuters flagged those accounts to Meta, they were taken down.

The company's handling of user reports showed significant gaps. A 2023 document indicated Facebook and Instagram users filed approximately 100,000 valid reports of fraudsters messaging them each week, yet Meta ignored or incorrectly rejected 96% of them. Safety staffers resolved to improve, hoping to dismiss no more than 75% of valid scam reports in the future.

Beyond paid advertisements, Meta's user base faces exposure to 22 billion organic scam attempts every day, according to a December 2024 presentation. Organic scams include fraudulent classified ads placed free on Facebook Marketplace, hoax dating profiles and phony medical treatments promoted in health groups.

The scale of fraudulent activity on Meta's platforms reflects broader issues with anonymous account creation, according to Bellack. "If online platforms required strong proof of real-world identity to open an account, it would not be stop all fraud, but it would be much harder for bad actors to attack us at scale," Bellack wrote in September 2025. He noted that platform safety teams work hard to catch bad accounts quickly, but without unique identification of repeat offenders, "bad guys can just tweak their evasion settings and try again, so eventually sheer volume means a lot of bad accounts get through undetected."

The Securities and Exchange Commission is investigating Meta for running advertisements for financial scams, according to internal documents. Britain's regulator stated in 2024 that it found Meta's products involved in 54% of all payments-related scam losses in 2023, more than double all other social platforms combined. The SEC and UK regulator didn't respond to questions for the Reuters report.

Meta's internal documents anticipated regulatory penalties of up to $1 billion for scam advertisements. However, a November 2024 document noted these fines would be substantially smaller than Meta's revenue from scam ads. Every six months, Meta earns $3.5 billion from just the portion of scam ads that "present higher legal risk," such as those falsely claiming to represent consumer brands or public figures.

The company's approach to fraud enforcement has drawn criticism from industry observers. According to Sandeep Abraham, a fraud examiner and former Meta safety investigator who now runs Risky Business Solutions, "If regulators wouldn't tolerate banks profiting from fraud, they shouldn't tolerate it in tech."

Jonathan Bellack, a former Google employee who writes about platform accountability, characterized Meta's public response to the revelations as deliberately misleading. "This is a deliberate communications strategy, designed by highly-compensated experts, to deflect and obscure what's actually going on, in order to protect Meta's reputation and power," Bellack wrote in his Platformocracy newsletter on November 7, 2025. He noted that Stone's statement about reducing user reports by 58% avoided addressing the correlation between reports and actual scam incidence. "If filing a report is cumbersome and Meta does nothing to help, reports could drop over time because people give up on the process, even if the abuse continues or gets worse," Bellack wrote.

Stone stated that over the past 18 months, Meta reduced user reports of scam ads globally by 58% and removed more than 134 million pieces of scam advertising content so far in 2025. The company acknowledged having "large goals to reduce ad scams in 2025," with hopes to reduce such advertisements in certain markets by as much as 50%, according to a 2024 document.

Bellack criticized Meta's citation of 134 million removed ads without providing context. "Throw out a huge number that we mortals can barely comprehend as a sign of how much success they're having. Surely big means good, right? Who knows, because Meta doesn't tell us the total number of pieces of ad content on their platforms," he wrote. The leaked documents indicate Meta shows users 15 billion higher-risk ads daily, providing perspective on the scale of the problem relative to enforcement actions.

The regulatory pressure on Meta to combat scams occurs as the company pours money into artificial intelligence development, with plans for as much as $72 billion in overall capital expenditures this year. Zuckerberg has sought to reassure investors that Meta's advertising business can bankroll this spending. "We have the capital from our business to do this," he said in July when announcing construction of a data center in Ohio the size of New York City's Central Park.

Meta's penalty bidding system represents a departure from standard enforcement approaches in digital advertising. Google suspended over 39.2 million advertiser accounts in 2024, marking a 208% increase compared to 12.7 million accounts suspended in 2023, as the company implemented more aggressive AI-powered fraud detection systems.

The advertising industry faces broader scrutiny over auction transparency and fraud. The Media Rating Council is developing Digital Advertising Auction Transparency Standards, though advocacy organizations have warned the framework risks legitimizing opacity while providing cover for continued lack of accountability.

Meta's advertising measurement practices have faced previous scrutiny. A former product manager filed a whistleblower complaint in August 2025 alleging the company artificially inflated return on ad spend metrics for Shops ads by counting shipping fees and taxes as revenue while subsidizing auction bids by as much as 100%.

The concentration of scam advertising on Meta's platforms contrasts with the company's public safety initiatives. Meta announced comprehensive measures to combat romance scams in February 2025, stating it had taken down more than 408,000 accounts engaged in romance scams during 2024.

Industry experts have raised concerns about inflated performance metrics that may mislead advertisers about campaign performance. Digital marketing professionals warn that advertisers showing return on ad spend figures of 10 or higher may actually be performing worse than those reporting more modest returns of 2 due to attribution problems and audience targeting issues.

The revelation of Meta's penalty bidding approach adds complexity to ongoing debates about platform accountability and advertising standards. While Meta maintains that aggressive fraud fighting aligns with user, advertiser and company interests, the internal documents suggest financial considerations have consistently influenced enforcement decisions.

For marketing professionals, the disclosures raise questions about brand safety and the reliability of closed-loop advertising platforms. The documents indicate Meta deliberately exploited complexity in programmatic advertising relationships, making it difficult for advertisers and regulators to understand the true extent of fraudulent activity within the ecosystem.

The company's stated goal of reducing scam advertising revenue to 5.8% by 2027 would still represent substantial financial exposure. At Meta's current revenue scale, 5.8% would translate to approximately $10 billion annually from advertisements the company internally classifies as scams or prohibited goods.

Timeline

• 2021-2022: Meta discovers six-figure network of accounts pretending to be U.S. military members, sending millions of messages weekly attempting to scam users
• 2022: Documents note Meta's "lack of investment" in automated scam detection, classifying scam ads as "low severity" problem viewed as bad "user experience"
• 2023: Facebook and Instagram users file approximately 100,000 valid reports of fraudsters messaging them each week; Meta ignores or incorrectly rejects 96% of reports
• Summer 2024: Meta develops "penalty bids" program charging suspected fraudsters higher advertising rates rather than blocking them entirely
• October 2024: Meta executives present Zuckerberg with moderate enforcement approach focusing on countries facing near-term regulatory action
• November 2024: Internal documents project Meta will earn 10.1% of 2024 revenue ($16 billion) from scam ads and banned goods; documents anticipate regulatory penalties up to $1 billion
• December 2024: Presentation estimates users exposed to 15 billion higher-risk scam advertisements daily and 22 billion organic scam attempts daily
• February 2025: Document shows team vetting questionable advertisers restricted from taking actions costing more than 0.15% of total revenue
• April 2025: Internal Meta review concludes easier to advertise scams on Meta platforms than Google
• May 2025: Safety staff presentation estimates Meta platforms involved in one-third of all successful scams in United States
• August 2025: Former Meta employee files whistleblower complaint alleging artificial ROAS inflation for Shops ads
• November 6, 2025: Reuters publishes investigation based on internal Meta documents from 2021-2025

Summary

Who: Meta Technologies faces scrutiny after internal documents obtained by Reuters reveal the company's approach to monetizing fraudulent advertising. CEO Mark Zuckerberg received enforcement strategy presentations in October 2024. Meta spokesman Andy Stone disputed characterizations of the documents while declining to provide updated figures on scam advertising revenue.

What: Internal documents show Meta projected earning approximately 10% of 2024 revenue ($16 billion) from advertisements for scams and banned goods. The company implemented a "penalty bid" program charging suspected fraudsters premium advertising rates rather than blocking them entirely. Meta set a 95% certainty threshold before banning advertisers, applying financial penalties below that threshold. Users face exposure to an estimated 15 billion higher-risk scam advertisements daily. The company restricted enforcement teams from taking actions costing more than 0.15% of total revenue in first half of 2025.

When: Documents span from 2021 through 2025 across Meta's finance, lobbying, engineering and safety divisions. The penalty bid program emerged as a centerpiece of scam reduction efforts during summer 2024. In October 2024, executives presented Zuckerberg with a moderate enforcement approach. Reuters published its investigation on November 6, 2025, based on these internal materials.

Where: The practices affect Meta's entire advertising ecosystem spanning Facebook, Instagram, WhatsApp and Messenger. An April 2025 internal review of online communities where fraudsters discuss their trade concluded it is easier to advertise scams on Meta platforms than Google. A May 2025 presentation estimated Meta platforms were involved in one-third of all successful scams in the United States. Britain's regulator found Meta products involved in 54% of all payments-related scam losses in 2023.

Why: Internal documents indicate financial considerations influenced enforcement decisions. Rather than voluntarily improving standards, a 2024 strategy document showed Meta would only act against suspect advertisers in response to impending regulatory action. The penalty bid approach allowed Meta to charge higher rates to suspected fraudsters while maintaining revenue streams. The company balanced enforcement costs against projected regulatory penalties, with documents anticipating fines up to $1 billion—substantially smaller than $3.5 billion earned every six months from higher legal-risk scam advertisements. Meta is pouring as much as $72 billion this year into AI development, with Zuckerberg reassuring investors the advertising business can bankroll this spending.