Meta Faces New US Probe Over Billions in Alleged Scam Ad Profits
Bipartisan senators demand FTC and SEC investigations as the social media giant is hit with a separate €479 million fine in Spain for data use.
Meta Platforms is facing a fresh wave of regulatory scrutiny in Washington after a bipartisan pair of senators called for federal investigations into allegations the company knowingly profits by billions of dollars from fraudulent advertisements on its platforms.
In a letter sent to the Federal Trade Commission (FTC) and the Securities and Exchange Commission (SEC), Senators Richard Blumenthal (D-CT) and Josh Hawley (R-MO) urged the agencies to take action against the social media giant. The move introduces significant legal and headline risk for Meta, whose stock paradoxically closed up 3.78% at $636.22 in Tuesday trading, seemingly shrugging off the mounting regulatory pressures from both sides of the Atlantic.
The senators' demand follows reports citing internal company documents suggesting Meta's platforms, including Facebook and Instagram, are deeply enmeshed in the architecture of online scams. "Meta has knowingly facilitated and profited from the proliferation of scams on its platforms, raking in billions of dollars at the expense of American consumers," the senators wrote in their official request.
The letter alleges that Meta has consciously chosen to allow fraudulent ads to run rampant, cutting safety staff while investing heavily in generative AI projects that could exacerbate the problem. It calls on regulators to force Meta to disgorge any profits from fraudulent ads, impose steep civil penalties, and hold individual executives accountable.
This new front in Meta's regulatory battles comes as the company, with a market capitalization now over $1.5 trillion, navigates a complex global landscape of legal challenges. On the same day, a commercial court in Madrid ordered Meta to pay €479 million ($550 million) to Spanish media outlets for unfair competition related to its use of user data for advertising between 2018 and 2023. Spain has also opened a separate inquiry into the company's broader data collection practices under the EU's strict digital regulations.
Meta has pushed back against the senators' claims. A company spokesperson stated the allegations were "exaggerated and wrong," asserting that the company is actively working to combat scams and has reduced user reports of fraud by 58% over the last 18 months. "Neither users nor the vast majority of advertisers that use our platforms want to see this kind of content," the spokesperson added.
Despite the denials, the allegations strike at the heart of Meta's business model, which generated over $51 billion in revenue in the third quarter of 2025, primarily from advertising. The prospect of disgorging profits or facing substantial fines could present a material risk if the investigations proceed and find wrongdoing.
Investor sentiment, however, appeared buoyed by broader market trends and the company's strong performance in AI-driven advertising. Analysts have pointed to Meta's improving ad systems as a key driver of its recent financial success, a narrative that has so far overshadowed the persistent drumbeat of regulatory risk. According to company filings, ad revenue grew 26% year-over-year in the most recent quarter, showcasing the platform's enduring appeal to marketers.
The call for an investigation adds to a growing list of legal and ethical challenges for the tech giant, including recent court filings that alleged the company suppressed internal research about the mental health impacts of its platforms on young users.
While Meta recently scored a significant victory when a U.S. judge ruled it does not hold a monopoly in the social media market, allowing it to retain Instagram and WhatsApp, the relentless regulatory pressure from lawmakers and international bodies continues to pose a long-term threat. The outcome of the requested FTC and SEC probes will be closely watched as a bellwether for how U.S. regulators intend to police the sprawling digital advertising ecosystem.