FTC Eyes Social Platforms Over Scam Ads

Signaling a possible crackdown on fraudulent online ads, the Federal Trade Commission is planning to vote next week on whether to issue subpoenas to eight social media and video platforms.

The proposed subpoenas would seek information regarding the platforms' "ad review practices and what, if any, measures they have taken to detect, prevent, and reduce deceptive advertising on their platforms, including advertising related to fraudulent health-care products, financial scams, and fake goods," the agency stated Wednesday.

News of the FTC's potential investigation comes several weeks after it reported that social media scams cost consumers an estimated $1.2 billion last year. 

Despite the apparent prevalence of online scams, the FTC may not be able to force online platforms to police their advertisers, due to Section 230 of the Communications Decency Act. That law protects web companies from liability for posts by third parties -- including advertisers.



As far back as 2009, a federal judge dismissed a lawsuit accusing Google of displaying deceptive ringtone ads in the search results.

More recently, a judge dismissed a class-action complaint brought by Facebook users who said they lost money after responding to ads on the social platform.

Facebook argued in that matter that it was immunized by Section 230.

“Rather than suing the merchants who allegedly defrauded them, or the creators of the allegedly fraudulent advertisements, plaintiffs seek to hold Facebook liable,” the company wrote in papers filed with U.S. District Court Judge Jeffrey White in the Northern District of California.

White agreed, writing that even if the allegations in the complaint were proven true, they would only show that the social platform hosted ads created by third parties. The users in that case recently urged the 9th Circuit Court of Appeals to revive their claims.

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