The Coalition Asks for a More Robust Review of Advertisements Following Rapid Spread of Fake Investment Ads Leading to “Pump-and-Dump” Schemes on its Facebook and WhatsApp Platforms
HARRISBURG – Attorney General Dave Sunday led a bipartisan coalition of 42 Attorneys General in sending a letter to Meta Platforms, Inc., who does business as Meta, to address the increasing trend of scam advertisements appearing on the newsfeeds of Facebook users.
These ads misuse the images and reputations of well-known financial figures – such as Warren Buffett – or institutions to lure unsuspecting individuals into WhatsApp “investment groups.” These groups are often used to perpetrate illegal “pump-and-dump” schemes and are not affiliated with the people used in the advertisements.
“The people behind these fake advertisements know what they are doing is illegal, that’s why they use celebrities and famous companies to try to trick people into working with them,” Attorney General Sunday said. “These ‘pump-and-dump’ scams are outright illegal investment fraud. Meta should take responsibility for predatory advertising on their platform.”
Example of Fraudulent Investment Ad on Facebook
These “pump-and-dump” schemes are often perpetuated by encouraging a user, once in the group, to purchase stocks based on often false information that a stock may be on the rise. However, once a user purchases many shares of the selected stock – this is the “pump” aspect of the scam that will increase the total the scammer can obtain from a potential victim– then the scammers will then sell their shares of the stock at a higher price – this is the “dump.” This causes the prices of the shares purchased by the user lured from Facebook to be essentially worthless. These kinds of schemes often result in devastating financial losses, sometimes wiping out entire life savings. These schemes are illegal and are an example of securities or investment fraud.
Despite Meta’s use of automated systems and occasional human review to remove fraudulent ads, fraudsters have consistently evaded these systems by frequently changing their ads.
Attorney General Sunday and the bipartisan coalition are calling on Meta to thoroughly review its advertising review practices to protect consumers from being shown advertisements that are scams, especially ones that may result in devastating losses. Despite Meta’s stated policies and automated systems, these scams persist and adapt, indicating that current enforcement efforts are insufficient to put an end to these scams. Constituents across the country are falling victim to these and similar scams and in some cases losing hundreds of thousands of dollars to these fraudulent operations facilitated through Meta’s platforms. This letter urges Meta to implement more robust preventative measures, such as enhanced advertiser diligence and meaningful human review of investment-related advertisements. If Meta cannot effectively curb these harmful scams, we insist they cease running investment advertisements altogether.
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