The Federal Court case initiated Friday by the Australian Competition and Consumer Commission comes on the heels of a private criminal action by mining magnate Andrew “Twiggy” Forrest launched in February over crypto investment scams that used his name and image.

The ACCC case accuses Facebook owner Meta Platforms Inc and Meta Platforms Ireland Limited of engaging in false, misleading or deceptive conduct in violation of the Australian Consumer Law or the ASIC Act by publishing the scam ads and being knowingly in the advertisers’ false and misleading conduct and representations.

The regulator has brought the claims under the ASIC Act, with the consent of ASIC, in the event the Federal Court finds the alleged conduct involved financial services, which do not fall within the scope of the ACL.

“The essence of our case is that Meta is responsible for these ads that it publishes on its platform,” ACCC chair Rod Sims said.

“It is a key part of Meta’s business to enable advertisers to target users who are most likely to click on the link in an ad to visit the ad’s landing page, using Facebook algorithms. Those visits to landing pages from ads generate substantial revenue for Facebook.”

The ads featured well-known figures such as businessman Dick Smith, TV presenter David Koch and NSW Premier Mike Baird and linked to fake articles with quotes from the celebrity purporting to endorse the scam cryptocurrency scheme.

Users who signed up were later contacted by scammers, who used high-pressure tactics such as repeated phone calls to convince them to deposit funds into the fake schemes, according to the ACCC.

The ACCC alleges Facebook knew about the ads and failed to take sufficient steps to remove them even after being contacted by public figures around the world whose names and images were being used in the scam ads without their consent.

“We allege that the technology of Meta enabled these ads to be targeted to users most likely to engage with the ads, that Meta assured its users it would detect and prevent spam and promote safety on Facebook, but it failed to prevent the publication of other similar celebrity endorsement cryptocurrency scam ads on its pages or warn users,” Sims said.

“Meta should have been doing more to detect and then remove false or misleading ads on Facebook, to prevent consumers from falling victim to ruthless scammers.”

The ads damaged the reputations of the public figures they featured and caused “untold losses” to consumers.

In one “shocking instances” a consumer targeted by a scam ad lost more than $650,000, according to the ACCC.

ACCC case follow rare private criminal proceedings

In proceedings filed in the Magistrates Court of Western Australia, Forrest alleges Facebook breached federal money laundering laws by failing to implement sufficient controls or to maintain a corporate culture necessary to prevent scammers from using its platform to defraud users.

“I’m committed to ensuring that social media operators don’t allow their sites to be used by criminal syndicates,” Forrest said.

“I want social media companies to use much more of their vast resources and billions of dollars in annual revenue to protect vulnerable people – the people who are targeted and fall victim to these horrible scams with their hard-earned savings.”

Principal at Mark O’Brien Legal, Steven Lewis, is acting on Forrest’s behalf in the rare private criminal prosecution, which was undertaken with the special permission of Attorney-General Michaelia Cash.

Lewis said three charges will be brought under part 10 of the Criminal Code Act 1995 – chief among them a charge under section 400.7, which concerns dealing with the proceeds of crime.

“We will allege that [Facebook] was reckless as to the fact that its computers were being used as an instrument of crime,” Lewis said.

In 2019, Forrest penned and open letter to Facebook founder and CEO Mark Zuckerberg lambasting the site’s “socially reprehensible recalcitrance” in allowing the scam ads to run on site, after it was reported that a WA woman lost over $600,000 to a scam that used a fake endorsement from Forrest.

The ACCC estimates investment scams cost Australians $177 million in 2021, more than double the toll taken by scammers in 2020.

“Investment scams are more prevalent than ever, and scammers are capitalising on interest in cryptocurrency in particular,” ACCC Deputy Chair Delia Rickard said in a statement last year.

Forrest also filed a separate civil suit against Facebook in the Superior Court of California last year, seeking injunctive relief and other remedies.

A hearing is scheduled for March 28 in the WA Magistrates Court.

Lawyerly has reached out to Meta for comment.

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