Bad ads on social media: FTC asks platforms about their screening policies

Spend time on social media and video streaming platforms and what will you find? Photos from friends’ vacations, aspirational kale salads, the latest dance fads – and ads for bogus health products, financial scams, counterfeit goods, and the like. How many fraudulent ads appear on those platforms? We conservatively estimate it as . . . a whole lot. The FTC is asking Meta, Instagram, YouTube, TikTok, Snap, Twitter, Pinterest, and Twitch for information about the steps they’re taking to screen for misleading ads on their sites.

Social media is undoubtedly a lifeline for many people, but it’s also a gold mine for fraudsters and fly-by-nighters. Based on reports from consumers, scams are skyrocketing on those platforms. FTC data suggest that in 2022, people reported losing more than $1.2 billion to fraud that started on social media. That’s more than any other contact method and it represents a major increase over previous years.

That’s why the FTC is using its legal authority under Section 6(b) of the FTC Act to take a deeper dive into the world of fraudulent ads on social media. Take a look at the sample order sent to the eight companies and you’ll see we’re asking questions about the standards they apply to paid commercial ads on their sites, the steps they take – human and automated – to comply with their own standards, and performance metrics that will shed light on how scammers are using their platforms to defraud consumers, including what we can learn about the consumers who may be harmed by the ads. The study also should tell us more about how the platforms create ads (including any use of generative AI), the formats the platforms offer to advertisers, and the use of “shoppable” ads – ads that allow people to buy items directly through the ad.

In addition, the orders seek more information about how platforms help consumers distinguish ads and commercial messages from other types of content, including disclosure tools for endorsers and influencers.

The orders ask questions about the 2019 through 2023 calendar years, which should offer insights into business conduct since the start of COVID.