Meta allowed China-linked ad fraud to persist to protect billions in revenue

CALIFORNIA: Meta Platforms knowingly allowed large volumes of fraudulent and banned advertising from China to continue on Facebook and Instagram, despite internal findings that the activity generated billions of dollars and caused widespread harm to users, according to internal company documents reviewed by Reuters.

The documents show Meta determined that nearly one-fifth of its China-based advertising revenue — more than $3 billion annually — stemmed from ads promoting scams, illegal gambling, pornography and other prohibited content. China generated more than $18 billion in advertising revenue for Meta in 2024, accounting for over 10% of the company’s global sales, despite the fact that Meta’s platforms are banned for ordinary users inside China.

Internal records reveal that Meta staff identified China as the single largest source of scam advertising worldwide, with fraudulent ads targeting users across Asia, North America and Europe. Victims included shoppers duped into buying fake health products and investors tricked into high-return investment schemes.

In early 2024, Meta launched a dedicated enforcement effort aimed at fraud originating from China. The initiative cut the share of banned ads tied to Chinese advertisers from 19% to 9% of China-related revenue within months, the documents show.

But the crackdown was short-lived. After intervention by Chief Executive Mark Zuckerberg, Meta paused the initiative, dismantled the China-focused anti-fraud team and reversed restrictions on Chinese advertising agencies. Internal records do not specify the details of Zuckerberg’s involvement, but note the move followed an “Integrity Strategy pivot.”

Following the rollback, fraudulent advertising surged again. By mid-2025, banned ads had climbed back to about 16 per cent of Meta’s China revenue, according to the documents.

Former Meta executive Rob Leathern, who once oversaw business integrity, said the scale of the abuse represented a failure to protect users. “Those levels are not defensible,” he said. “I don’t know how anyone could think this is acceptable.”

Meta spokesperson Andy Stone said the China-focused effort was intended to be temporary and that the company continues to fight fraud globally. He said Meta’s automated systems blocked or removed 46 million ads from Chinese partners over the past 18 months, often before users saw them. Stone added that Meta penalizes or cuts off agencies that repeatedly violate advertising rules.

The internal documents, however, show Meta managers concluded that fraud levels from China would remain permanently higher than elsewhere. Rather than aiming to match global enforcement standards, Meta opted to “maintain” China’s share of overall harm, citing revenue concerns and the difficulty of policing the market.

Meta relies on 11 major Chinese advertising agencies, known as resellers, which recruit smaller firms and advertisers. These agencies receive special privileges, including delayed enforcement reviews that allow suspect ads to remain live while awaiting human review — a process that can take days or longer.

An external consultancy hired by Meta warned that the structure of its Chinese ad business encouraged abuse and left fraudsters facing little risk. Because the ads target foreign users, Chinese authorities typically do not intervene, the report found.

Reuters testing showed that scam ads could be placed through Chinese intermediaries for as little as $30, often paid in cryptocurrency. Ads promising unrealistic investment returns ran without interruption and generated user engagement before being removed.

Meta’s Chinese advertising boom has been fueled in part by legitimate retailers such as Shein and Temu, which internal documents say were not involved in fraud. The bulk of the illicit activity, Meta found, came from small and mid-sized Chinese businesses operating through layers of intermediaries.

Despite repeated internal warnings, Meta continued doing business with advertisers that violated rules at high rates, sometimes imposing financial penalties instead of bans. In one case, an advertiser flagged for deceptive practices remained among Meta’s top global advertisers before ties were eventually severed.

Internal records show Meta staff repeatedly raised concerns about user harm, only to be told enforcement actions would be limited because of the potential impact on revenue. In one instance, when asked whether major Chinese partners should be punished, a colleague responded that “the revenue impact is too high.”

Meta said it cooperates with law enforcement and has removed thousands of accounts linked to fraud, including in cases involving Chinese-run investment scams that led to hundreds of millions of dollars in losses.

Still, internal assessments concluded that most enforcement actions would only have temporary effects. Advertisers shut down for violations could quickly reappear through new accounts and agencies, restoring revenue streams.

“It’s likely the revenue will return,” one internal document stated.