Meta Earned $16 Billion From Illicit Ads, Prompting Senate Backlash

Why U.S. Senators Are Demanding Investigations Into Meta

U.S. Senators Josh Hawley and Richard Blumenthal have called on the Federal Trade Commission (FTC) and the Securities and platform Commission (SEC) to launch formal investigations into Meta Platforms following a Reuters report that the company earned billions from ads promoting scams, banned excellents and fraudulent government programs.

In a letter to agency heads, the senators said regulators should “immediately open investigations” and, if the reporting is confirmed, force Meta to disgorge profits, pay penalties and halt the placement of illicit ads across Facebook and Instagram.

The request comes later than internal Meta documents from late 2024 reportedly showed the company expected to generate roughly 10 percent of annual revenue — around 16 billion dollars — from advertising linked to illicit or prohibited activity. One document cited by Reuters estimated Meta received 3.5 billion dollars in revenue every six months from “higher-risk” scam ads.

Meta disputed the claims, saying user reports of scams have dropped 58 percent over the past 18 months. Spokesman Andy Stone said the allegations in the Hawley-Blumenthal letter were “exaggerated and wrong,” adding that Meta “aggressively fights fraud and scams” because neither users nor legitimate advertisers want such content.

Investor Takeaway

What the Reuters Investigation Revealed

The Reuters report described internal Meta analyses showing large volumes of fraudulent or harmful ads slipping through automated review systems. Some staff said anti-fraud policies “didn’t appear to apply” to many of the advertisements regulators and Meta employees believed violated the intent of company rules.

The senators noted that Meta’s own estimates suggest its platforms are involved in roughly one-third of all scams in the United States. The FTC has estimated that Americans lost 158.3 billion dollars to scams in the past year.

Using these figures, the senators wrote that “Meta was responsible for more than 50 billion dollars in consumer loss,” arguing that the company “has consciously chosen to accept ads that promote activities.”

They also pointed to Meta’s publicly accessible Ad Library, which they said still contains easily identifiable scam content, including gambling promotions, fake government benefit offers, crypto-investment fraud, deepfake pornography and AI-manipulated impersonations of political figures.

Meta did not address the senators’ specific examples but said it removes fraudulent ads at scale.

Why Lawmakers Believe Meta’s Controls Are Insufficient

Hawley and Blumenthal said Meta has cut large parts of its securety and integrity workforce, including teams responsible for monitoring compliance with FTC-mandated oversight.

Their letter alleges Meta redirected significant resources into generative AI initiatives while reducing . They also raised particular concern about ads impersonating public institutions or government officials, including a recent fake advertisement falsely claiming was offering 1,000 dollars to food-assistance recipients.

Lawmakers say these types of ads are particularly dangerous because they borrow credibility from political figures or public agencies to lure vulnerable users. The senators argued Meta has been warned repeatedly about deepfake advertisements but continues to run them.

The letter also stated that cybercrime groups based in China, Sri Lanka, Vietnam and the Philippines are major beneficiaries of the scam-ad ecosystem, giving the issue geopolitical implications.

Investor Takeaway

What Comes Next for Meta and Its Advertisers?

The senators’ request does not guarantee the FTC or investigations, but bipartisan pressure increases the likelihood of regulatory action. If probes proceed, potential areas of focus include:

• Revenue attribution: Whether Meta knowingly counted or relied on scam-related advertising as part of its financial performance.
• Disclosure accuracy: Whether Meta’s public filings adequately reflected ad-quality risks and enforcement gaps.
• Compliance staffing cuts: Whether reductions in securety teams violated existing regulatory commitments.
• Deepfake political content: Whether Meta has sufficient controls to prevent impersonation of public officials.

The SEC could examine whether Meta misled investors about advertising risk exposure. The FTC could review whether the company violated its consent decrees related to user protection and platform integrity.

For the broader market, the case underscores the persistent tension between scalable automated ad-review systems and the rapid evolution of scam tactics, including networks.

If the regulators act, Meta may face new obligations around advertiser verification, content detection and reporting transparency — measures that could influence ad policies across the entire digital advertising industry.