Twiggy v Facebook: Decision looms in billionaire’s anti-scam battle

Billionaire Andrew Forrest has spent years battling Facebook for allowing scam ads on its platform, part of a problem that defrauds Australians of billions of dollars every year. But despite his efforts, it’s only getting worse.

Forests’ legal counsel, Simon Clarke, said that they had noticed a big step-up in scam ads – using the billionaire’s likeness – last year, with generative AI playing a crucial role in the growing menace.

Andrew Forrest levelled a criminal case against Meta – the owner of Facebook – in 2022 over cryptocurrency scam ads bearing his likeness.Credit: Bloomberg/Getty

Between April and December, there were 1700 new fraudulent ads posted, aided and abetted by 10 to 15 fake Andrew Forrest Facebook profiles popping up each week supporting them.

With the social media groups doing little to combat the problem, Clarke is the spearhead of the billionaire’s challenge to the reach of US laws that have cloaked its trillion-dollar business from the harm caused by fraud on its platform globally.

“This will not change unless and until a court decision can order the US platforms to take effective measures to stop it,” says Clarke. “Dr Forrest’s action seeks to do that.”

While Forrest failed with criminal charges against Facebook in Australia in April this year, 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.

Facebook filed a motion to dismiss the case earlier this year and a judgment is expected at any time. A lot is at stake for Facebook and its $US1.3 trillion parent, Meta, which also owns Instagram and WhatsApp.

Facebook is protected from almost any harm caused by its platform thanks to the Communications Decency Act, which was enacted by president Bill Clinton’s administration in the 1990s – before Facebook existed.

It was designed to protect internet service providers, such as AOL, from any liability for what was published on their platforms.

One of Facebook innovations is how it ensures this immunity is enjoyed by its business in overseas markets by Australia with an offshoring model that means it doesn’t technically operate in Australia.

This means any victims and aggrieved parties, like Forrest, are forced to sue it in the US.

President Bill Clinton enacted legislation that gave the nascent internet services industry immunity from what was published on their platforms.Credit: AP

Another innovation was putting its advertising business inside the entity that owns the social media platform. This means Facebook can use the same immunity to ensure it has no liability for the scam ads that appear on its platform.

Forest’s legal battle is challenging Meta on these two fronts, first to stop it using US immunity to protect it from liability in Australia, but also to remove the immunity cloak from its ad business globally which generated almost all of its revenue – $US132 billion last year.

It is one of Forrest’s key claims that Meta’s advertising business is separate and distinct from the Facebook user platform rather than an integrated part of the business.

“If they profit from Australians, they should not be able to hide behind Californian laws that leave Australian users exposed,” Forrest has said.

Clarke says: “No litigant has previously challenged the global reach of this US immunity that big US tech companies enjoy.

“Ad displays generated by Meta are business activities over which they have complete control, and it was not Congress’s intention in 1996 to immunise internet service providers running social media platforms from negligence and bad business practices.”

Katharine Kemp, an associate law professor at the University of NSW, who researches competition and consumer protection regulation, including their application to digital platforms, also backs Forrest’s assertion that Facebook’s role in delivering these ads to vulnerable members plays a key role.

“Facebook is so much more involved in actually bringing that ad to a particular person, based on their profile, and profiting from the person engaging with the ad, so are gaining from the misconduct of others in their ad business, and it certainly should be their responsibility in light of that,” she said.

Facebook declined to comment on the case given it is before the courts, but executives have pointed out it is up against sophisticated, well-funded and well-connected organised criminal networks.

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