Did you know Facebook and Instagram have been quietly running a side-hustle that they’d probably rather you not look too closely at? It turns out that a surprising amount of advertisement revenue that Meta collects comes from China-linked advertisers pushing everything from illegal gambling to pornography, full-on investment scams, and other banned items. Reuters spent months reviewing internal documents and talking to insiders; the picture it uncovered is the tech equivalent of a department store leaving the back door unlocked because too many customers keep wandering in through it with cash.
Meta Unmasked
Internal records reviewed by investigators indicated that Meta believed nearly one in four ads related to scams and prohibited products on its global platforms came from China. The impact stretched widely: Shoppers in places like Taiwan ended up with fake health products, while investors in the United States and Canada lost substantial savings to fraudulent schemes.
The investigation found that Meta has tolerated massive levels of ad fraud tied to China-based marketers, even though the company knows a chunk of that money comes from ads that break its own rules. According to Reuters, Meta’s China ad business was worth about $18.4 billion in 2024, around 11% of its global revenue. Almost 19% of that – roughly $3 billion – came from ads that violated the tech company’s policies.
Even more bizarre is the fact that Chinese advertisers are technically not allowed to use Meta’s platforms at home because Facebook and Instagram are banned inside China. But they’re absolutely allowed to buy ads targeting people elsewhere. So Chinese companies have become some of Meta’s most lucrative customers, who, according to Reuters, frequently push scams, gambling sites, and misleading financial promotions.
Rob Leathern, a former senior director of product management at Facebook, didn’t mince words when Reuters asked him about it. “The levels that you’re talking about are not defensible,” he said. “I don’t know how anyone could think this is okay.”
The Enabler
Meta briefly tried to get this under control. In early 2024, the company formed a China-focused anti-fraud unit. The team cut the rate of banned ads from about 19% to 9% by the end of the year. But here’s the plot twist: After internal debates – and, according to Reuters, after influence from CEO Mark Zuckerberg – Meta dissolved the unit and lifted a freeze on new Chinese ad partners.
Immediately afterward, the percentage of ads that broke rules and spread scams shot back up. By mid-2025, it had returned to around 16%. Another reminder that when you unplug the smoke detector because it’s too loud, the fire doesn’t magically disappear.
Meta, for its part, insisted to Reuters that the anti-fraud unit was “always temporary” and that scammers are getting more sophisticated. In a statement to the news outlet, Meta spokesperson Andy Stone said: “Scams are spiking across the internet, driven by persistent criminals and sophisticated, organized crime syndicates constantly evolving their schemes to evade detection.”
But Meta’s own commissioned research complicated that narrative. The company hired a London firm, Propellerfish, to investigate the problem. The study concluded that Meta’s rules and partners were actually enabling fraud in China’s reseller ecosystem.
Meta sells ads in China through layers of resellers. Big agencies recruit smaller agencies, which recruit even smaller ones. Each new layer makes it harder to figure out who is actually placing the advertisements. Some second- and third-tier agencies openly advertised the ability to help clients dodge Meta’s enforcement systems. Reuters uncovered internal documents showing that certain partners received special “whitelisting,” meaning their ads stayed live longer, even after being flagged. One document admitted that the extra review time gave scammers “adequate” opportunity to accomplish what they came to do.
Reuters went even further by sending undercover reporters to test Meta’s so-called “Trusted Experts” program. These partners are supposedly vetted to help advertisers place compliant ads. Instead, several of them offered to place fake crypto investment ads – the kind Meta claims to ban. Agencies in Hong Kong, Vietnam, and Estonia all offered to help, with some accepting payment in cryptocurrency. Meta later removed the partner directory and said it was reviewing the agencies involved.
The Plot Thickens
The fallout for real users has been very real. In one fraud case tied to Facebook and Instagram ads, federal prosecutors in Illinois seized $214 million from a scam that lured victims into overpriced Chinese stocks. Victims were funneled from Facebook ads into WhatsApp groups run by people pretending to be US investment advisers.
And Meta isn’t just getting criticism from reporters. After a separate Reuters investigation revealed how much scam revenue runs through the company, two senators urged the SEC and FTC to investigate the social media giant’s ad practices.
The larger picture, though, boils down to incentives. Meta’s entire business is built on advertising. Chinese advertisers make up a huge slice of its revenue, and Reuters’ documents show the company knew exactly how much of that revenue came from fraudulent activity. Cutting off that money would hurt. Cracking down on it requires manpower and enforcement tools. Looking the other way, on the other hand, is profitable.
Users, of course, are left trying to navigate an online funhouse where every mirror looks like a legitimate ad until it suddenly becomes a crypto trapdoor. A recent discussion on WBUR, an NPR member station in Boston, noted that social media platforms have become prime hunting grounds for fraudsters using scam advertisements, and Meta’s scale gives scammers an enormous playground.
Meta maintains that it’s investing in better tools and detection systems. But the internal documents Reuters reviewed, along with undercover tests and enforcement rollbacks, tell a different story – one in which the company repeatedly finds itself choosing between revenue and policing its own platform.
And every time, the money seems to win.
