Meta Faces Federal Probe Over Billions in Ad Revenue From Illicit Activities

Senators Josh Hawley and Richard Blumenthal are pressing the FTC and SEC to launch investigations into Meta (META) following revelations that the social media giant may be generating substantial income from fraudulent advertising campaigns. The lawmakers’ letter indicates that the company could face significant penalties, including disgorgement of profits and increased regulatory oversight, if the allegations are substantiated.

The Scale of the Problem

Internal documentation obtained by Reuters suggests that Meta recognizes roughly one-third of all US scams involve its platforms—Facebook and Instagram combined. More critically, the company’s own estimates indicate that approximately one-tenth of its 2024 annual revenue, translating to roughly $16 billion, may be linked to ads promoting illegal products or services. The figures point to a structural issue where Meta’s ad revenue stream appears partially dependent on illicit content that circumvents platform policies.

Breaking down the figures further, Meta generates approximately $3.5 billion every six months specifically from what it classifies as “higher risk” scam advertisements. The categorization reveals that despite the company’s stated commitment to safety, many such fraudulent ads successfully navigate Meta’s anti-fraud detection systems.

Types of Illicit Advertising

The senators identified multiple categories of deceptive content still circulating across Meta’s ad library, including counterfeit gambling platforms, cryptocurrency fraud schemes, payment scams, fabricated AI-generated intimate content services, and false federal benefit schemes. Additionally, the lawmakers flagged concerns about synthetic political advertising, including deepfaked videos impersonating government officials—a threat that extends beyond financial fraud.

Meta’s Defense and Industry Context

Meta disputed the characterization of the allegations, claiming that scam reports have declined by 58 percent over the past year and a half. The company argued that the senators’ position exaggerates the issue. However, Hawley and Blumenthal countered that scam promotions remain easily discoverable through Meta’s own public ad library, suggesting that the company’s anti-fraud measures remain ineffective at scale.

The senators attributed the proliferation of fraudulent ads to Meta’s staffing reductions in trust and safety divisions, even as the company has massively invested in artificial intelligence development. They also noted that many scam operations originate from organized cybercriminal networks based internationally, requiring coordinated enforcement efforts.

Broader Context and Market Impact

Federal Trade Commission data indicates that Americans lost over $158 billion to fraud schemes in the preceding year, underscoring the scale of the challenge. The senators argued that Meta’s role in facilitating this ecosystem demands immediate regulatory intervention. The investigation request marks an escalation in scrutiny over how tech platforms monetize user attention while managing harmful content.

META stock closed trading at $613.05, reflecting a 3.16% gain for the session, with after-hours trading showing the security at $614.02, up 0.16%.