By Renju Jose
(Reuters) -Australia's competition watchdog filed a lawsuit against Facebook (NASDAQ:FB) owner Meta Platforms on Friday, alleging the social media giant failed to prevent scammers using its platform to promote fake ads featuring well-known people.
The advertisements, which endorsed investment in cryptocurrency or money-making schemes, could have misled Facebook users into believing they were promoted by famous Australians, the Australian Competition & Consumer Commission (ACCC) said.
The lawsuit filed in the Federal Court also alleges Facebook "aided and abetted or was knowingly concerned in false or misleading conduct and representations by the advertisers," the ACCC said in a statement.
"The essence of our case is that Meta is responsible for these ads that it publishes on its platform," ACCC Chair Rod Sims said. "It is alleged that Meta was aware ... scam ads were being displayed on Facebook but did not take sufficient steps to address the issue."
Meta said any ads that scammed people out of money or misled users violated its policies and the company uses technology to detect and block such posts, adding it had "cooperated with the ACCC's investigation into this matter to date."
"We will review the recent filing by the ACCC and intend to defend the proceedings," a Meta spokesperson said in an emailed statement, declining to comment further as the case was before court.
The ACCC said the ads used images of several Australian business leaders, TV hosts and politicians and contained links to fake media articles that included quotes attributed to the personalities.
Users who signed up were contacted by scammers to convince them to deposit funds into the fake schemes, the regulator said.
"We are aware of a consumer who lost more than A$650,000 ($480,000) due to one of these scams ... this is disgraceful," Sims said.
Australian iron ore magnate Andrew Forrest, chairman of Fortescue Metals Group (OTC:FSUGY), launched criminal proceedings against Facebook last month over scam ads, including ones using his image to promote cryptocurrency schemes.
The corporate regulator, the Australian Securities and Investments Commission (ASIC), usually handles financial fraud complaints against companies. The ACCC, which is seeking financial penalties, said it was given temporary powers to file the lawsuit.
Facebook earlier this week announced a programme to help train Australian political candidates and influencers on cyber security to stop the spread of potential misinformation during campaigning for the country's upcoming federal election.