The Facebook problem that only hurts Australians

Rampant celebrity cryptocurrency scam ads are as Australian as Tim Tams, koalas or the Great Barrier Reef, according to American Facebook whistleblower Frances Haugen, who says the tech giant’s lack of focus on Australia has let scams run wild on its platform compared with other markets.

Local public figures, including Andrew Forrest, Dick Smith and Waleed Aly, have had their likenesses falsely used to promote cryptocurrency scams, an issue the consumer watchdog estimates has cost Australians more than $13 million in 2024 so far and has made an undetermined amount of profit for Facebook.

American Facebook whistleblower Frances Haugen.Credit: AFR

Social media scams are a global issue but one that is acute in Australia, according to Haugen.

Haugen formerly served as a senior product manager at Facebook before quitting in May 2021 to become a whistleblower, leaking tens of thousands of internal documents that exposed how much Facebook knew about the harm it was causing, including knowingly promoting misinformation and hate speech, and pro-eating-disorder content to teenage girls.

Haugen is now focused on improving transparency and accountability for social media platforms, including in Australia, where she’s spent an extended visit meeting local parliamentarians, policy groups including Reset Australia, and regulators such as the eSafety Commissioner. She has also taken up a role as a fellow at the Australian National University’s Tech Policy Design Centre.

Speaking in a wide-ranging interview in Melbourne, Haugen said that during her time working at Facebook, the company’s safety teams had largely turned a blind eye to the Australian market.

“In the United States, we don’t have a problem with celebrity scam ads the way you do,” she said. “I was shocked when I came here and saw the extent of it.

“It’s like when you go to a restaurant, and you see a mess on the floor, and it’s like, ‘Oh, the kitchen is not clean’.

“If they’re not doing celebrity scam ads, they’re not doing any of the other more important stuff. And every celebrity scam of a pensioner meaningfully changes the course of their life. The fact that it’s happening and not getting fixed is outrageous.”

This masthead reported in April that Facebook Australia made $1.34 billion from advertisers during the 2023 calendar year, though more than a billion dollars of that local revenue was funnelled to an international subsidiary.

‘In the United States we don’t have a problem with celebrity scam ads the way you do … I was shocked when I came here and saw the extent of it.’

Frances Haugen

Haugen said that while she was at Facebook, the company’s safety teams were primarily focused on American English or British English, and Australian English was an afterthought for its moderation efforts, allowing scams to thrive.

“You guys have such colourful phrases, like the one I learned last time was ‘open slather’,” Haugen said.

“I think people really don’t understand how brittle Facebook’s systems are. And I think Australia is probably paying the highest cost for that. Because you are the most different from British English or American English, you are a high per-capita income country, you’re a great target.”

Facebook denies whistleblower Frances Haugen’s claims.Credit: Tony Avelar

A spokesman for Facebook’s parent company, Meta, denied Haugen’s claims in a statement to this masthead.

“These are baseless and completely inaccurate claims. Meta doesn’t want scams on our platforms, and we are continuing to invest in tools and technology to prevent them,” the spokesman said.

“The safety of our users is of utmost importance, and we continue to work with industry, the government and law enforcement to protect Australians from scams.”

Whether the company likes it or not, Australia is highly relevant for Facebook, given its high-stakes legal stoush with Australian billionaire Andrew Forrest, the founder of mining giant Fortescue, who has spent years battling the company for allowing scam ads on its platform featuring his likeness.

Forrest is alleging that Meta’s automated technology plays an active role in creating and displaying scam ads through its platform and that its software uses sophisticated technology, including generative AI, to determine what completed ads look like and who sees them.

Forrest alleges that between April and December last year, there were 1700 new fraudulent ads posted featuring his image, aided and abetted by 10 to 15 fake Andrew Forrest Facebook profiles popping up each week supporting them.

The billionaire failed in his bid to bring criminal charges against Facebook in Australia in April this year when the Commonwealth Director of Public Prosecutions decided not to pursue them. Forrest’s ongoing civil action in the US – which he commenced in 2021 – challenges Facebook owner Meta on its use of legal immunity for online publishers to shield its entire business from any liability.

Meta lost a court battle against Forrest in the US on Friday morning, meaning he can proceed with discovery. Judge Casey Pitts, in the California District Court, denied Meta’s appeal to take its defence to a higher court. Both sides will appear before Judge Pitts again in October.

It’s a matter that Haugen is watching closely and said would likely have global implications.

Fortescue founder Andrew Forrest.Credit: Alex Ellinghausen

“I’m very excited about it, it’s going to be super interesting if Forrest is allowed to pursue his lawsuit,” she said. “It might be the first chance for us to actually force data out of the company, to see what they’re doing about it.

“If a celebrity writes in and says, ‘There are scam ads about me’, Facebook could put their name on a list and just double check all the ads that have their name, or use facial recognition. And the fact that they are not doing that in Australia means you guys are not being allocated even basic resources.”

An example of a scam ad showing Andrew Forrest’s likeness.

While Australia is often perceived as a relative minnow economically, Haugen’s opinion is that it should team up with similarly sized, like-minded markets such as Canada to push for stronger social media regulation.

She praised Australia’s early leadership on online safety laws – including the establishment of the Office of the eSafety Commissioner, a world first at the time – but said the country now had an opportunity to develop more ambitious and holistic reforms.

More specifically, Haugen is calling for the creation of an independent, comprehensive ads database, not controlled by Facebook, that would allow independent researchers and start-ups to analyse platform advertising practices. This, she said, could help counter issues such as celebrity scams.

With bipartisan support emerging for measures including banning under-16s from social media, Haugen also urged Australian policymakers to think beyond “bumper sticker” solutions.

She and digital rights groups such as Reset Tech are also calling for long-awaited reforms of Australia’s privacy act to grant Australians more privacy protections. Those planned reforms have been delayed several times, but the government is now expected to introduce legislation to parliament next month.

“I think in terms of finding a middle power who could lead a coalition of middle powers, Australia and Canada are the two most interesting on that list,” she said.

“And that’s one of the things I’ve pointed out to government officials here, in terms of the opportunity for geopolitical influence, is if there were to be a coalition of middle powers, there is an opportunity for Australia to demonstrate leadership. If Australia joins with Canada, if it joins with Malaysia, Indonesia ... It starts getting to be the size of the United States.”

With Colin Kruger

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