Meta Faces Scrutiny Over Revenue from Fraudulent Ads

Internal documents reveal tensions between profit and platform safety

Meta may have earned up to 10% of its 2024 revenue—roughly $16 billion—from advertisements linked to scams and prohibited products, according to internal company documents. Estimates suggest that as many as 15 billion suspicious ads appear daily across Facebook, Instagram, and WhatsApp. Rather than immediately banning advertisers flagged by its systems, Meta sometimes imposes higher ad rates on them. This approach is intended to deter abuse, though it also allows the company to continue profiting from questionable sources.

Algorithmic Filtering and Financial Incentives

Meta’s automated systems only block advertisers when there is at least a 95% probability they are fraudulent. If the confidence level is lower, the company applies a “penalty bid,” charging more to run the ad instead of removing it. While this method is framed as a deterrent, internal data shows it contributes significantly to Meta’s ad revenue. The balance between moderation and monetization remains a central challenge for the platform.

Documents reviewed by Reuters include input from Meta’s finance, engineering, and security teams, indicating long-standing awareness of the issue. Some internal reports warn that stricter ad filtering could pose serious business risks. Meta’s spokesperson disputed the 10% estimate, calling it exaggerated and claiming the company aggressively targets scam content. In the first ten months of 2025, Meta reportedly removed over 134 million fraudulent ads.

Regulatory Pressure and Global Investigations

Meta is currently facing regulatory scrutiny in multiple countries over its handling of scam-related advertising. The U.S. Securities and Exchange Commission is investigating financial fraud ads, while UK authorities have linked Meta platforms to over half of all payment fraud cases in 2023. A May 2025 internal presentation acknowledged that nearly one-third of successful online scams in the U.S. occur on Meta’s platforms. Despite public statements, internal documents suggest the company recognizes its central role in the global fraud ecosystem.

Efforts to reduce scam content have included experimental systems such as the “penalty bid,” which increases ad costs for flagged advertisers. Another initiative, informally called the “Scammiest Scammer” list, identifies the most complained-about advertisers each week, though this does not always lead to immediate bans. Meta aims to reduce the share of revenue from prohibited content to below 6% by 2027, down from 10% in 2024. Internal projections estimate that potential regulatory fines may reach $1 billion—far less than the revenue generated from these ads.

The Challenge of Moderating at Scale

Meta’s moderation systems have struggled to keep pace with the volume and complexity of fraudulent content. One internal report found that 96% of user-reported scams were either ignored or incorrectly dismissed. These scams range from fake investment offers and cryptocurrency traps to illegal drug ads and identity theft. The company’s vast user base makes it a prime target for malicious actors, complicating efforts to enforce safety standards.

Experts argue that Meta’s scale and influence make its role in digital fraud particularly significant. Its platforms serve as meeting points for advertisers, scammers, and users, creating a difficult environment for effective moderation. While other tech firms face similar challenges, Meta’s financial incentives and global reach attract heightened attention. The coming years will test whether the company can reconcile profitability with user protection—or whether external pressure will force deeper reforms.