SPECIAL REPORT: Zuckerberg’s Meta fuelled fraud and porn as it reaped $3 billion from China based scam advertising

By Jeff Horwitz and Engen Tham for AML Intelligence

LAST year, Meta had to reckon with an ugly conclusion about its advertising customers in China: They were running scam ads and defrauding Facebook, Instagram and WhatsApp users worldwide.

Though China’s authoritarian government bans use of Meta social media by its citizens, Beijing lets Chinese companies advertise to foreign consumers on the globe-spanning platforms. As a result, Meta’s advertising business was thriving in China, ultimately reaching over $18 billion in annual sales in 2024, more than a tenth of the company’s global revenue.

But Meta calculated that about 19% of that money – more than $3 billion – was coming from ads for scams, illegal gambling, pornography and other banned content, according to internal Meta documents.

The documents are part of a cache of previously unreported material generated over the past four years by teams including Meta’s finance, lobbying, engineering and safety divisions. The cache reveals Meta’s efforts over that period to understand the scale of abuse on its platforms and the company’s reluctance to introduce fixes that could undermine its business and revenues.

Meta China scam ads

The documents show that Meta believed China was the country of origin of roughly a quarter of all ads for scams and banned products on Meta’s platforms worldwide. Victims ranged from shoppers in Taiwan who purchased bogus health supplements to investors in the United States and Canada who were swindled out of their savings. “We need to make significant investment to reduce growing harm,” Meta staffers warned in an internal April 2024 presentation to leaders of its safety operations.

To that end, Meta created an anti-fraud team that went beyond previous efforts to monitor scams and other banned activity from China. Using a variety of stepped-up enforcement tools, it slashed the problematic ads by about half during the second half of 2024 – from 19% to 9% of the total advertising revenue coming from China.

Then Meta Chief Executive Mark Zuckerberg weighed in.

“As a result of Integrity Strategy pivot and follow-up from Zuck,” a late 2024 document notes, the China ads-enforcement team was “asked to pause” its work. Reuters was unable to learn the specifics of the CEO’s involvement or what the so-called “Integrity Strategy pivot” entailed.

Disbanded anti-scam team

But after Zuckerberg’s input, the documents show, Meta disbanded its China-focused anti-scam team. It also lifted a freeze it had introduced on granting new Chinese ad agencies access to its platforms. One document shows that Meta shelved yet other anti-scam measures that internal tests had indicated would be effective. The document didn’t detail the specifics of those measures.

Meta took these steps even as an outside consultant it hired produced research that warned “Meta’s own behaviour and policies” were fostering systemic corruption in the Chinese market for ads targeting users in other countries, additional documents show.

The upshot: Within a few months of Meta’s brief crackdown, a new crop of Chinese advertising agencies was flooding Facebook and Instagram with prohibited ads. By mid-2025, banned ads climbed back to about 16% of Meta’s China revenue.

Rob Leathern, who was a senior director of product management at Facebook until 2020 and is no longer at the company, said the scale of predatory advertising revealed in the documents represents a major breakdown in consumer protections at the social media giant.

“The levels that you’re talking about are not defensible,” he said of the percentage of abusive ads. “I don’t know how anyone could think this is okay.”

‘Temporary’ anti-scam team

In a statement to Reuters, Meta spokesperson Andy Stone said the work of the special team devoted to fighting Chinese fraud was always meant to be temporary. He later added that Zuckerberg didn’t order the team’s disbanding. Zuckerberg’s order to teams working on scams and other high-risk harms, he said, “was to redouble efforts to reduce them all across the globe, including in China.”

As part of its normal enforcement processes, Stone said, Meta’s automated systems over the past 18 months have blocked or removed 46 million ads submitted through its Chinese business partners, usually before users saw them. Stone said Meta has severed relationships with unspecified Chinese agencies over misbehavior in the past and that the company docks commissions for Chinese partners that run too many violating ads.

“Scams are spiking across the internet, driven by persistent criminals and sophisticated, organized crime syndicates constantly evolving their schemes to evade detection,” Stone wrote. “We are focused on rooting them out by using advanced technical measures and new tools, disrupting criminal scam networks, working with industry partners and law enforcement, and raising awareness on our platforms.”

The statement didn’t address many of the questions Reuters asked Meta about the documents, the policy discussions reflected in them, or the business decisions the company took as a result.

The revelations about Meta’s China business come at a time when the social media giant is already under fire for failing to curtail a deluge of advertising that promotes fraud and banned goods.

Meta revenue from banned content

Reuters reported last month that Meta earns $7 billion a year just from the portion of scam ads it considers “high risk,” and that 10% of the company’s 2024 revenue – about $16 billion – was projected to come from ads for scams, illegal gambling and banned products. Following the story, two U.S. senators called on the Securities and Exchange Commission and the Federal Trade Commission to look into the matter and “pursue vigorous enforcement action where appropriate.”

Nowhere are the tradeoffs Meta makes between protecting its users and protecting its revenue clearer than in China, a market unlike any other the company operates in. Meta staff in the internal documents characterize China as the company’s top “Scam Exporting Nation” and identify the country as the single largest source for a surge in fraud on its platforms.

The Chinese government didn’t respond to detailed questions sent by Reuters for this report to offices including the commerce, foreign and public-security ministries and its agencies for market and cyberspace administration.

China is so central to Meta’s scam problem that the company believes its national holidays affect the level of fraud on Facebook and Instagram globally: During the “Golden Week” holiday in October, when hundreds of millions of Chinese citizens travel, the rate of scams on Meta’s platforms declines worldwide, one document notes.

Scale

The harm inflicted on consumers by the tech giant’s Chinese advertisers can be immense: In March 2025, federal prosecutors in Illinois said that the U.S. Federal Bureau of Investigation seized $214 million in proceeds from the promoters of one fraud that used Facebook and Instagram ads to lure victims into a Chinese stock scam.

When users clicked on the ads, they were routed into WhatsApp groups run by “individuals in China posing as U.S.-based investment advisors,” said the prosecutors in a statement. Those “advisers” ultimately steered the victims into purchasing stock at vastly inflated prices, they said.

The prosecutors charged seven people from Taiwan and Malaysia, still believed to be at large abroad, with wire fraud and securities fraud. The FBI declined to provide additional details on the case, and the Department of Justice didn’t respond to a request for comment.

Stone, the Meta spokesperson, told Reuters the company cooperated with law enforcement and removed thousands of accounts involved in the scheme.