Meta Platforms, the parent company of Facebook and Instagram, is facing sharp criticism after internal documents reportedly showed that up to 10% of its global ad revenue comes from fraudulent or deceptive advertising - a revelation that has reignited scrutiny over the social media giant’s handling of online scams.

The report, published by TechCrunch citing internal estimates and anonymous sources, suggests that Meta may have profited billions of dollars from ads that promote nonexistent products, investment schemes, and fake celebrity endorsements.

If accurate, the finding would mean Meta earned roughly $13 billion in scam-related advertising revenue in 2024 alone - based on its total reported earnings of around $134 billion for that year.

“These are not isolated incidents,” said one former Meta integrity team member. “It’s systemic — scams are baked into the revenue stream.”

A Hidden Crisis in Meta’s Ad Ecosystem

According to the report, Meta’s internal safety teams have long warned executives that deceptive ads are among the platform’s fastest-growing sources of income, especially in emerging markets across Asia, Africa, and Latin America, where digital literacy remains low and regulation is sparse.

The scams often use familiar tactics: impersonating brands, fabricating investment opportunities, or hijacking verified pages to promote AI-generated fake endorsements featuring public figures.

In one instance, fraudulent ads used AI deepfakes of Elon Musk and Mark Zuckerberg promoting “instant wealth” crypto apps - which later drained victims’ bank accounts.

Despite repeated internal flags, enforcement appears inconsistent. TechCrunch’s sources say Meta “struggles to balance ad safety with revenue growth,” and that automated ad approval systems frequently miss violations.

“The AI moderation tools are optimized for scale, not accuracy,” said the source. “When billions are at stake, the bias tilts toward letting bad ads through.”

Meta’s Response

Meta has not disputed the existence of fraudulent ads, but a spokesperson told TechCrunch the company “proactively removes scams” and “invests heavily in ad integrity.”

“We remove millions of scam ads every day and work closely with regulators worldwide,” the statement read. “The figures cited in this report are misleading and based on incomplete information.”

However, Meta did not deny that fraudulent ads generate revenue before they are flagged or removed. Under current policy, the company keeps ad payments from campaigns already run — even if later found to be deceptive.

Regulators in Australia, the U.K., and the European Union have already fined or investigated Meta for hosting fraudulent content, with consumer agencies calling for compensation frameworks for victims.

The Bigger Picture: Profits vs. Integrity

This revelation comes as Meta doubles down on its AI-driven ad delivery system, which automatically matches ads to users across its platforms with minimal human oversight. While the model has boosted engagement and revenue, critics say it also amplifies risk by enabling scammers to rapidly test and target audiences at scale.

“AI advertising has created a gold rush for fraudsters,” said Dr. Eleanor Briggs, digital policy researcher at Oxford Internet Institute. “It’s the equivalent of self-driving cars with no traffic laws - you can reach millions instantly with almost no accountability.”

The report also follows growing calls from lawmakers for stricter transparency in digital advertising, including mandatory disclosure of rejected ads and clearer refund mechanisms for scam victims.

What It Means for Meta

For Meta, the implications are both reputational and financial. The company’s pivot toward “metaverse” and AI innovation has already strained investor confidence; now, questions about its ethical advertising model could trigger renewed regulatory pressure in key markets.

If verified, the 10% estimate would represent one of the largest known instances of systemic profit from fraudulent activity in digital advertising history — a figure that could invite further investigation by U.S. and EU regulators under consumer protection and securities laws.

“The irony is that the company building the future of AI can’t clean up its own backyard,” said Jason R. Kline, analyst at Gartner Media. “Trust is Meta’s biggest currency, and it’s devaluating fast.”

The Takeaway

Meta’s alleged dependence on scam-related revenue highlights a growing contradiction in the digital economy - where the same algorithms that fuel advertising efficiency also enable exploitation.

As regulators intensify scrutiny and users grow more aware, the world’s largest social network faces a defining question: can it continue to monetize attention without monetizing deception?