Internal documents reveal that Meta, the parent company of Facebook and Instagram, has long struggled with widespread fraudulent advertising on its platforms and took steps to avoid regulatory scrutiny while protecting billions of dollars in ad revenue.

According to Reuters, Japanese regulators raised concerns last year after a surge of scam ads flooded Facebook and Instagram. These included fake investment schemes and AI-generated celebrity product endorsements. Meta feared Japan might require verification of all advertisers, which could reduce fraud but also cost the company revenue.

In response, Meta launched an enforcement campaign to remove scam ads. At the same time, internal documents show the company took steps to make problematic ads less “discoverable” to Japanese regulators. Staffers manipulated Meta’s publicly searchable Ad Library by identifying top keywords and celebrity names used to find fraudulent ads and systematically removing those ads from search results.

The tactic successfully hid some scam ads from regulators, giving the impression that Meta was more effective at controlling fraudulent content than it actually was. A memo noted that after the effort, fewer than 100 scam ads appeared in searches during the last week of the campaign. Japanese officials, including ruling Liberal Democratic Party lawmaker Takayuki Kobayashi, acknowledged the improvement.

While Meta argued the removal of scam ads was legitimate and part of broader anti-fraud measures, former employees described the efforts as “regulatory theater,” designed to give the company favorable optics without fully addressing the problem. Meta spokesperson Andy Stone maintained that advertiser verification is just one of many tools the company uses to reduce scams and that scam reports have decreased by 50% globally over the past year.

The documents also show that Meta’s “general global playbook” now incorporates similar tactics in other countries, including the United States, Europe, India, Australia, Brazil, and Thailand, to delay or limit mandatory advertiser verification.

Meta earns the majority of its revenue from advertising, and internal assessments indicated that unverified advertisers were disproportionately responsible for scam activity. While universal verification would reduce fraudulent ads, the company has resisted the cost of implementing it globally, estimating it would total around $2 billion and potentially reduce total revenue by up to 4.8%.

The documents reveal that Meta’s approach is largely “reactive only,” complying with stricter rules only when legally required, as seen in Taiwan and Singapore. In Taiwan, where new legislation mandated verification for financial advertisers, Meta verified accounts to avoid fines, resulting in a significant drop in scam ads locally. However, the company’s algorithms often redirected blocked ads to other markets, perpetuating a “whack-a-mole” problem.

Fraud across social media has surged worldwide, fueled by AI-generated ads, cryptocurrency payments, and organized criminal networks. Meta’s own data suggest that scams on its platforms cause billions in global consumer losses each year.

Despite these challenges, Meta has repeatedly sought to manage regulatory perception rather than fully implementing proactive solutions. Internal memos from Japan and other markets describe strategies to mimic regulator searches, manage the “prevalence perception” of scams, and stage verification rollouts to appear compliant.

Meta’s internal documents cast light on the tension between the company’s financial interests and the growing global demand for transparency and accountability. Regulators in Europe, the U.S., and Asia continue to examine Meta’s handling of fraudulent advertising, with some lawmakers calling for stricter enforcement and investigations.

A Meta spokesperson emphasized that the company remains committed to reducing scams on its platforms, stating that enforcement measures, verification programs, and other tools are part of ongoing efforts to protect users.