Noticed more scams circulating on social media ads? So has the Federal Trade Commission.
On Thursday, the FTC voted 4-0 to investigate(Opens in a new window) the problem, citing a surge in consumers falling for fraud perpetrated over social media ads. To tackle the issue, the US regulator is issuing orders(Opens in a new window), demanding eight social media platforms submit data on how they try to stop fraudsters from exploiting their ads.
The platforms include Facebook, Instagram, Pinterest, Twitter, YouTube, Twitch, Snapchat and TikTok. The FTC also notes all the companies are legally required to comply with the data request.
By essentially subpoenaing the social media platforms, the FTC is aiming to create a study that’ll examine the entire scope of the problem, including how scammers are beating the safeguards to circulate their fraudulent ads. The affected companies must provide data spanning from 2019 to this year.
“This study will help the FTC ensure that social media and video streaming companies are doing everything they can to keep scammers and deceptive ads off their platforms,” said Samuel Levine, the director of the FTC’s Bureau of Consumer Protection.
Citing its own data, the FTC also noted that in 2022 consumers reported losing more than $1.2 billion to fraud schemes circulating on social media, which is “more than any other contact method.”
Social media platforms generally have safeguards in place to stop fraudsters from abusing their systems. However, the FTC wants to look at whether the companies are “monitoring for compliance” including with both human-led reviews of the ads, and via automated systems.
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In addition, the US regulator will examine the financial incentives social media companies may have in turning a blind eye to the scam ads. The FTC notes: “The orders also require the companies to report their ad revenue, the number of ad views, and other performance metrics, including for ads involving categories of products and services more prone to deception such as those intended to treat, prevent, or cure substance use disorders and tout income opportunities.”
What action the FTC could take from the study remains unclear. But the US regulator could sue a social media platform, and demand it pay fines and enact changes, if an alleged wrongdoing was found.
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