HARTFORD, CT — Attorney General William Tong is co-leading a bipartisan coalition of 42 attorneys general in calling on Meta Platforms, Inc. (Meta) to protect people from fraudulent investment ads appearing on Facebook.
The fraudulent ads are luring users into pump-and-dump schemes that have led to thousands of people losing hundreds of millions of dollars, according to a statement from Tong’s office.
The New York Attorney General’s office received a report of an individual who engaged with a fraudulent Facebook ad, which claimed to be connected to a well-known investment management firm and lost over $100,000. In their
letter to Meta
, the coalition highlights the dangers of these ads and urges Meta to improve its process for reviewing ads before they appear on its platforms.
“With costs on the rise and wallets stretched, a lot of people are looking for ways to earn extra money. Do not be fooled by get-rich-quick schemes on social media,” Tong said. “We are seeing a proliferation of phony advertisements for investment scams that have resulted in major financial losses for people. Meta can and must review and remove these scams before anyone else is harmed.”
Tong urged all Facebook users in Connecticut to be alert for these ads and to do their homework before investing.
The fraudulent Facebook ads use images of well-known individuals, such as Warren Buffet, Cathie Wood, and Elon Musk, to draw in users. However, the groups who run the ads are not affiliated with those individuals. The ads often boast about stocks with incredibly high returns for investors and some even offer free “consultations” or investment advice, according to the statement. When users click on the ads, they are prompted to join a WhatsApp group, where they are targeted in a pump-and-dump scheme.
An investigator joined the fake investment tip WhatsApp group, and after joining the group the scammers called the investigator’s personal cell phone. The caller was not a native English speaker and appeared to use artificial intelligence to change her voice to sound like she had a British accent. Despite the British accent, the caller said she was in “Arkansas.” When asked to identify the capital of Arkansas, she was unable to do so.
In these pump-and-dump schemes, the scammers provide a series of recommendations to buy certain stocks. The prices of these stocks are then rapidly pumped up when they are purchased by the users. The fraudsters then profit from the price inflation by quickly selling, or “dumping” the securities at a high price, which in turn causes the prices to plummet. The new owner of the stocks typically loses a substantial part of their money when the security’s price falls. Pump-and-dump schemes are illegal and constitute securities 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, Tong said. Months after submitting scam reports to Meta, the New York Attorney General’s office continued to receive scam ads.
The coalition letter urges Meta to implement more robust preventative measures, such as enhanced advertiser diligence and meaningful human review of investment-related advertisements before they run. If Meta cannot effectively curb these harmful scams, the attorneys general urge Meta to cease running investment advertisements altogether.
Joining Attorney General Tong in issuing today’s letter are the attorneys general of Alaska, American Samoa, Arizona, Arkansas, California, Colorado, Delaware, Georgia, Hawai’i, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Utah, Vermont, Virginia, Virgin Islands, Washington, West Virginia, Wyoming, and the District of Columbia.
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