So here's an uncomfortable story about when profit incentives collide with platform safety. Meta Platforms Inc. (META) apparently knew for years that Chinese advertisers were flooding Facebook, Instagram, and WhatsApp with fraudulent ads but didn't do much about it. Why? Because those scam ads were generating billions in revenue, according to a Reuters report published Monday.

When the Anti-Fraud Team Gets Too Good at Its Job

Internal Meta documents spanning the past four years paint a troubling picture. The company was fully aware of widespread abuse on its platforms, particularly originating from China. Here's the kicker: in 2024, roughly 19% of Meta's $18 billion in annual revenue from China came from ads linked to scams, illegal gambling, and pornography. That's about $3.4 billion if you're doing the math at home.

Meta did create an anti-fraud team to address the problem, and it worked. The team managed to cut problematic ads in half during the latter part of 2024. Success, right? Not quite. According to the report, CEO Mark Zuckerberg intervened personally, and things went sideways fast. The company disbanded the anti-fraud team, lifted a freeze on new Chinese ad agencies, and shelved other anti-scam measures.

The predictable result? Banned ads from China surged back to around 16% of Meta's China revenue by mid-2025. It's almost like removing the team fighting fraud leads to more fraud.

Meta did not immediately respond to a request for comment.

The Regulatory Hammer Starts Falling

This isn't happening in a vacuum. The Reuters report follows leaked internal documents showing Meta projected approximately $16 billion in revenue from scam advertisements and banned goods in 2024, accounting for nearly 10% of its total revenue. That's a lot of money from activities the company supposedly prohibits.

U.S. Senators Richard Blumenthal (D-Conn.) and Josh Hawley (R-Mo.) have called for an investigation and regulatory action against Meta over its alleged profiting from fraudulent advertisements. It's one of those rare bipartisan moments when both sides agree something smells wrong.

The pressure isn't just domestic. In September, Singapore ordered Meta to implement stricter anti-scam measures on Facebook or face a fine of up to S$1 million ($775,698). Australia's getting involved too. Earlier this month, Westpac Banking Corp's CEO Anthony Miller publicly urged social media companies like Meta to take a more active role in stopping online scams as threats to consumers escalate.

According to MarketDash Edge Stock Rankings, Meta has a growth score of 78.31% and a momentum rating of 32.05%.

Price Action: On a year-to-date basis, Meta stock climbed 8.06%. On Monday, it rose 0.59% to close at $647.51.