Social platforms were warned; now they face scrutiny on ad practices

For years, social media companies were warned to take action and clean up their platforms, or the government would do it for them. So, it’s no surprise that the Federal Trade Commission is ordering these platforms to divulge how they review advertising to filter out scams, frauds and counterfeits.

The reason? They aren’t doing a very good job at protecting Internet users. In 2022, consumers were bilked out of $1.2 billion from schemes that started on social media – making it the number one place for criminals to initiate scams.

Now, the FTC is ordering the operators of Facebook, Instagram, YouTube, TikTok, Snap, Twitter, Pinterest, and Twitch to detail how they review the tens of billions of dollars in advertising they put on their sites to ensure that they are not promoting fraud, scams, and counterfeits (ranging from knock-offs to piracy).

The advertising practices of companies such as Alphabet (the parent company of Google and YouTube) are already under scrutiny. The Department of Justice and state attorneys general have sued the company, alleging that the company’s dominant role as a buyer, seller, and marketplace for advertising is harmful.

In a January 2023 filing, Attorney General Merrick Garland said, “Google has used anticompetitive, exclusionary, and unlawful conduct to eliminate or severely diminish any threat to its dominance over digital advertising technologies.”

Now these dual issues — alleged dominance over markets and skepticism over the diligence to prevent bad actors preying on Internet users — are intersecting at the federal level, begging the question: would a company that didn’t have such a stranglehold on the advertising market be more apt to curb abuse? That is a question I hope is raised by both the DOJ and FTC in the course of their inquiries because the current system is not working.

It is much too easy for bad actors to use advertising to dupe consumers. Recent Digital Citizens Alliance investigations show how advertising is used by criminals that peddle pirated content to fuel their profits and as a lure to entice users to click on ads that infect their devices with ransomware and other dangerous malware.

Tech companies such as Google, Facebook, and Amazon were among the leading advertisers on piracy sites. In a separate investigation, the Digital Citizens Alliance (along with its research partners White Bullet and Unit 221B) found that criminals used advertising to bait users into infecting their devices. These malicious ads are big business, reaping bad actors $121 million. The FTC has warned consumers about the risk of malware on piracy sites.

Given the ease by which criminals can warp online advertising, the FTC’s order demanding details on the extent social media platforms try to root out scams, fraud, and counterfeits is an essential and welcome development.

Criminals succeed when those they rely on to dupe and harm their victims are lax or negligent. Platforms, payment processors such as Mastercard and Visa, domain operators such as GoDaddy, and delivery services such as FedEx (when it comes to physical goods) collectively play a critical role in blunting the ability of criminals to operate. Nobody expects them to be perfect — just responsible.

The FTC’s order, which comes with the force of law, suggests that the consumer watchdog is not satisfied with the current efforts of the platforms. “Social media has been a gold mine for scammers who tout sham products and other scams that have cost consumers enormously in recent years,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “This study will help the FTC ensure that social media and video streaming companies do everything they can to keep scammers and deceptive ads off their platforms.”

Which brings us full circle. For over a decade, social media platforms have been urged and cajoled to better police their sites. Now when it comes to scammy advertising, it’s facing a new action: A demand by the government. That’s never a good sign. Hopefully, the social platforms will take heed.

Based in Washington, D.C., Tom Galvin has been active on Internet security and safety issues for nearly two decades. As Executive Director of the Digital Citizens Alliance, Galvin is focused on raising awareness about issues such as piracy and malware, the illegal online sale of opioids, steroids as well as other prescription drugs, and the blurring of the lines between the Dark Web and mainstream digital platforms.