Podcast Summary: "How Meta Is Making Billions From Scam Advertising"

Podcast: Question Everything
Host: Brian Reed
Guest: Jeff Horwitz (Investigative Reporter, Reuters)
Release Date: November 20, 2025

Overview: Main Theme & Purpose

This episode explores how Meta (Facebook’s parent company) is knowingly earning billions of dollars in advertising revenue from fraudulent ads and scam operations on its platforms. Investigative reporter Jeff Horwitz, who broke the recent story based on internal Meta leaks, sheds light on alarming internal data, the real-world impact of scam advertising, and the legal loopholes—primarily Section 230—that enable Meta to avoid accountability. The episode examines the moral and systemic dilemmas posed by the current structure of internet regulation.

Key Discussion Points and Insights

1. Section 230: The Law Behind Internet Platforms

• Brian Reed introduces Section 230 as the 1996 law making internet platforms largely immune from liability for user-generated content, safeguarding vibrant online debate — but also facilitating neglect and exploitation.
• Section 230 has protected platforms even when harrowing consequences result from user activity (examples: harassment via fake Grindr profiles, recruitment by extremist groups on Facebook, spread of illegal sexual images on Reddit).
  • Quote:

    “For better and for worse, Section 230 has made it so that companies are largely not responsible for what happens on their online platforms, even if they're making huge profits from that activity.”
    — Brian Reed [04:44]

2. The Meta Leak: Inside Knowledge of Fraud

• Jeff Horwitz obtained a large leak of Meta’s internal documents, revealing how fraud and scam ads are rampant on Facebook, Instagram, and WhatsApp.
  • These include policy docs, engineering info, and screenshots of internal management discussions.
  • Jeff explains:

    “They believe they do not owe any user a duty to remove fraudulent ads from the platform. Like that's just not a thing that they are responsible for.”
    — Jeff Horwitz [05:26]

• Scale of Problem:
  • Meta made ~$160B in advertising revenue in the last year; Meta’s own estimate is that ~10% ($16B) came from scam or banned ads.
  • 15 billion scam ad impressions served daily.
  • Meta’s platforms implicated in about a third of all successful scams in the US.
  • Quote:

    “Meta's own research suggests its products have become a pillar of the global fraud economy.”
    — Brian Reed [09:24]

3. Scam Ad Examples and Victims

• Real ad example: Fake "McCormick spices" ad scam; hundreds reported getting duped.
  • Meta only removed ads after being publicly alerted; systemic solutions lag behind.
  • “If I fell for the McCormick spices and I gave my money, like, who can I go after?”
    – Brian Reed [12:00]
  • Jeff: “Functionally, no one.” [12:07]
• Victim story: Canadian Air Force recruiter’s Facebook account hijacked for weeks; her contacts lost thousands of dollars to crypto scams carried out in her name. Meta only responded after massive escalation.
  • Quote:

    "...the recruiter just kind of, like, broke down in tears because people were being defrauded, quite literally because they trusted her."
    — Jeff Horwitz [14:43]

4. Organized Crime & Human Trafficking

• Behind many scam operations: syndicates engaging in human trafficking, forcing victims into “scam farms” on the Myanmar border.
  • Quote:

    “These are like basically prison camps where people who've been mostly human trafficked are forced to work in what are essentially scam call centers. This is an industry that is like a few hundred thousand people working in it.”
    — Jeff Horwitz [16:15]

5. Meta’s Approach: Profits Over Enforcement

• Meta knows about the scams but dismisses or ignores 96% of valid user complaints about scam ads ([20:05]).
• In 2023, company targets for improvement still aimed to dismiss 75% of scam ad complaints.
• Even billionaire victims (like Andrew “Twiggy” Forrest) have little recourse.
  • Forrest sued Meta over AI-enabled scam ads using his likeness. For once, a court allowed his case to go forward, threatening Meta’s reliance on Section 230 ([22:10]).

6. How Meta “Fights” Fraud

• Limited mitigation: High-risk advertisers subjected to extra verification – but with a hard limit on financial impact (only up to 0.15% of Meta’s total revenue, about $100M).
  • When financial cost exceeded that, they'd stop enforcement ([23:49]).
• Perverse incentives: Meta sometimes charges suspected scammers extra fees (“penalty bid”) instead of banning them, making scam ads more lucrative.
  • Quote:

    “The more likely an ad buyer is to defraud Meta’s users, the more money Meta makes off them.”
    — Brian Reed [25:58]

• Meta only blocks an advertiser if its system has at least 95% confidence they’re a scammer; less than that and their ads stay ([29:10]).
  • Quote:

    “For an advertiser that Meta's automated system thinks is dirty... the level of certainty that Meta's prediction system needs to have to cut that advertiser off is at least 95%.”
    — Jeff Horwitz [29:12]

7. Wider Implications & Accountability

• Other countries with stricter regulations see better enforcement; in the US, Meta only acts when forced by law.
• Leaks from whistleblowers (not public oversight) remain the primary way the world learns about these practices.
  • Quote:

    “Leaks are a primary source of information about, like, how the hell products that are so deeply ingrained in our lives actually work... This is a broken system.”
    — Jeff Horwitz [33:41]

• Systemic failures are not inevitable: platform design choices could prioritize safety and integrity, but profit wins under the current system.
  • Quote:

    “Social media platforms… how people behave on them is heavily influenced by the design choices of the owners of those platforms.”
    — Jeff Horwitz [35:02]

Notable Quotes & Memorable Moments

• “Meta did $160 billion worth of revenue last year from advertising... around 10% of that was coming from banned ads.”
  — Jeff Horwitz [08:46]
• “If a fellow billionaire can’t appeal to Mark Zuckerberg personally and get a scam ad taken down, what hope do any of us have?”
  — Brian Reed [21:59]
• “Imagine if Section 230 were changed so users could easily sue Meta for serving them scam ads. ...Meta prioritized cleaning up its platforms of fraud in countries where there are regulations about it.”
  — Brian Reed [33:15]

Important Timestamps

• [01:20] – Brian introduces Section 230 and its impact on free speech and platform accountability
• [06:28] – Jeff Horwitz joins; description of what the leaked Meta files contain
• [08:46] – Scale & impact: 10% of Meta’s ad revenue from banned/scam ads
• [12:00] – Who’s legally responsible when you fall for a scam ad? (Answer: No one, due to Section 230)
• [14:03] – Victim’s ordeal fighting to take down a scam; Meta’s inaction despite law enforcement involvement
• [16:15] – Organized crime and human trafficking behind scam operations
• [20:02] – Meta's own stats: dismissing 96% of scam/fraud complaints
• [23:49] – Revenue-first approach: fraud enforcement capped to protect Meta’s bottom line
• [25:58] – Meta profits more from likely scam ads (“penalty bids”)
• [29:12] – Meta’s threshold for banning scam advertisers: at least 95% certainty
• [33:41] – The broken system: whistleblower leaks as only window into internal workings
• [35:02] – Design choices impact online behavior; accountability is possible

Conclusions & Final Thoughts

• Meta’s business model, protected by Section 230, allows it to profit massively from scam activity while evading responsibility.
• Current US regulatory frameworks only incentivize change under external pressure; platform self-policing is both minimal and financially constrained.
• Real-world harms from scam ads are enormous, touching victims and enabling global criminal enterprises including human trafficking.
• Transparency is achieved not through regulation but dangerous whistleblowing and leaks.
• Design decisions, not inevitability, shape the internet’s moral landscape—change is possible if priorities shift.

For More:
Read Jeff Horwitz’s full reporting at Reuters.
Join ongoing debate about Section 230 on the Question Everything Substack.