SPECIAL REPORT-Meta tolerates rampant ad fraud from China to safeguard billions in revenue

“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.

Last year, Meta had to reckon with an ugly conclusion about its Chinese advertising customers: They were 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 reviewed by Reuters.

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. 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. 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 headed Meta's business integrity operations until 2019 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."

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. 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. 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.

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. "LITTLE OR NO RISK" FOR FRAUDSTERS

In China, Meta sells most of its ads through 11 major Chinese ad agency partners, referred to as "top tier resellers." Those big players both sell ads and recruit smaller advertising agencies, most but not all based in China, to purchase Facebook and Instagram ads through their systems. The Meta spokesperson told Reuters that company policy forbids Chinese partners from working with ad agencies or advertisers outside of China. Meta will investigate instances of such conduct that Reuters raised in this report, he added. The second-tier agencies, meanwhile, work with an ever-changing roster of advertisers who aren't interacting directly with the big agencies or Meta itself. As a result of this complex set-up, an opaque system of intermediaries exists.

The system is prone to facilitating advertisements for scams, illegal gambling and banned goods, according to internal documents, former staffers and a detailed report conducted for Meta by Propellerfish, the London-based consultants who warned that the company's own behavior was encouraging fraud. Meta hired the consultancy last year to study why its business in China was generating so much banned advertising. Propellerfish didn't respond to requests for comment for this story.

To place an ad on Facebook or Instagram, an advertiser must establish a user account, which requires little more than a name and a birthdate. But fake or stolen accounts are widespread, the Propellerfish report found, making it easy for fraudulent advertisers to disguise themselves. Chinese technology firms also sell tools that obscure advertisers' true identities and disguise fraudulent ads as innocuous, the report said. And artificial intelligence tools are used to generate fake documents, in case Meta attempts to verify the advertiser.

Compounding the phenomenon is an entire industry of "ad optimization specialists" that exploit weaknesses in Meta's enforcement systems and create ads for scams and banned goods, the report said. The shady advertising campaigns these specialists managed were often funded by "informal" sources, including loan sharks. The report didn't cite any of these sources by name. Because the harmful advertising doesn't target Chinese citizens, the Propellerfish consultants concluded, China's government generally turns a blind eye. "The Chinese government does not interfere when violations target overseas audiences," the report noted. Crooked domestic advertisers, therefore, face "little or no risk." Chinese authorities didn't respond to questions about the Propellerfish analysis.

Other social media platforms sell ads in China via similar networks of ad agency partners. But compared with its chief competitors for online advertising revenue, Meta has been more tolerant of illicit practices in China, Propellerfish found. "Enforcement is seen as inconsistent" by would-be abusers, the report said. TikTok was "stricter," it continued, and Google required thorough identity checks. Google and TikTok didn't respond to requests for comment.

Still, Meta considers its approach with Chinese advertisers to be acceptable, documents show. In one February 2025 document, it noted the "adversarial" nature of the Chinese market, where some advertisers are focused on quick profits, not steady business or brand-building. Unspecified "cultural factors," the document added, destigmatize unethical business practices targeting foreigners.

In the same February document, Meta managers said the company would tolerate elevated levels of misconduct by Chinese advertisers on a permanent basis. Rather than seek "parity" between the quality of Chinese ads and the rest of the world – a target it appeared close to achieving during its brief battle against fraudsters last year – it would preserve the status quo, merely aiming to "maintain the % of global harm" from China. SCAMMERS "ACCOMPLISH THEIR OBJECTIVES"

After China blocked its citizens from accessing major Western social media platforms in 2009, Meta spent years trying to get back into the country, home to a billion-plus potential users of Facebook, Instagram and WhatsApp. As part of a charm offensive, Zuckerberg visited China, studied Mandarin and met Chinese President Xi Jinping, according to news reports at the time. Meta and Chinese officials didn't respond to questions about Zuckerberg's outreach to Xi.

Less publicly, Meta built a secret system that would have given the Chinese government the ability to directly moderate Chinese users' content if Meta won permission to reenter the market, according to a 2016 New York Times report

and an internal company document from that period seen by Reuters. None of these efforts worked.

China's government, however, didn't block mainland businesses from running ads that target social media users outside the country. That advertising eventually would help Chinese companies reach millions of buyers around the world. China now represents 11% of Meta's overall revenue.

Part of Meta's success there has been driven by Shein and Temu, retail powerhouses that sell direct to consumers worldwide and that aren't the source of Meta's fraud problem, according to the internal documents. Those two Chinese companies, documents from July 2024 show, were Meta's largest advertisers anywhere, spending on average a combined $17 million on Facebook and Instagram every day. Amazon, which spent $4.8 million daily, was third. Shein, Temu and Amazon didn't respond to requests for comment.

The fraud, the documents said, comes usually from small and medium-sized Chinese businesses recruited by Meta's ad agency partners. In most of the world, advertisers on Facebook and Instagram buy ads through a business profile that is linked to advertisers' accounts and related pages they control. But because businesses can't readily access the platforms in China, Meta pays the 11 large Chinese ad agencies – known as resellers – to enlist advertisers and run ads for them on so-called "agency accounts."

Meta pays a roughly 10% commission to agencies for ads purchased through these accounts and grants them special protections. For instance, under a system known as "whitelisting" or "mistake prevention," Meta doesn't immediately remove ads purchased via top-tier agencies when they're flagged by automated systems for breaking Meta's advertising rules, internal documents say. Such rules ban the advertising of scams, illegal goods and services, and certain other products such as sex toys. Instead, suspect ads remain active as they undergo a secondary review by a human. If Meta's staffers are busy, that might take days – or never happen at all. And in the meantime, Meta continues to show the ads.

"Unfortunately the added time for secondary review is adequate for scammers to accomplish their objectives by gaining massive impressions," one document says. Some of Meta's Chinese partners openly advertise their ability to shield clients from Meta enforcement. "80% lower chance of suspension than other regular agents," promises the website of Yinolink, one of Meta's official Chinese partners.

Yinolink didn't respond to a request for comment. Meta also allows its Chinese partners to share their accounts with smaller ad agencies, known to the company as "second-tier" resellers. The practice gives Meta even less knowledge of the parties with whom it is doing business, internal documents show, be it the lower-level ad agencies or the clients buying the ads.

As such, the system is impossible for Meta to closely police, Propellerfish's analysis of the Chinese market determined. "Purchasing accounts is trivially easy," it said. "Violation or not," one ad optimization specialist told a Propellerfish consultant, "it doesn't make much difference for us." The report didn't identify the specialist or the consultant, who was posing on behalf of Propellerfish as a mystery shopper.

To determine how scam ads can be purchased on Facebook or Instagram using a Chinese agency, a U.S.-based Reuters reporter placed ads through intermediaries working with Meta's top Chinese partners. The intermediaries were second-tier agencies, some of whom Meta also certified as "Badged Partners," described in an official directory on its website as "trusted experts." Some of these lower-level partners openly boasted about their ability to run banned ads on Meta's platforms. Two of the agencies Reuters placed ads with were based outside China. In text chats, the reporter openly stated his interest in running banned ads at the time of purchase and received no resistance from the resellers. It cost $30 or less – paid via cryptocurrency – to set up each account. (See related story on

how we did this .)

The ad accounts controlled by these lower-level ad agencies came from some of Meta's leading Chinese partners, including GatherOne and Cheetah Mobile. Reuters then used the subleased accounts to place ads touting investments with unrealistic rates of return – a test of Meta's policies against get-rich-quick schemes. The ads ran unimpeded and prompted interest from dozens of Facebook users. Reuters informed the users the ads had been a journalistic test. Cheetah Mobile and GatherOne didn't respond to requests for comment.

Shortly before publication of this report, Meta deleted its Badged Partner directory from its website. "We're reviewing the program," Stone said, adding that the company would investigate how official Chinese agency accounts ended up in the hands of non-Chinese companies. "WE ARE SEEING HARM"

Between 2022 and 2024, Meta's Chinese ad revenue more than doubled, from $7.4 billion to $18.4 billion, according to the company's public financial statements. As the business soared, it grew increasingly apparent inside the company that fraudulent practices were widespread in China, the internal documents show. In 2023, as part of an earlier effort to address fraud, Meta stopped verifying new Chinese ad agency partners because of the "high harm" these intermediaries were causing, one document says. But Meta lifted the moratorium after its 2024 "pivot" in order to "unlock" revenue.

By late 2024, lower-tier Chinese ad agencies were once again gaining access to verified accounts on Meta's platforms. Of the annualized $240 million in advertising from newly verified resellers that year, half violated Meta's safety rules, Meta determined. "We are seeing harm from these newly verified agencies," the document says. Staffers responded by creating a dashboard to track the newly verified partners and started holding "weekly monitoring sessions to review and address problematic agencies." Due to the high rates of misconduct, Stone said, Meta reimposed its moratorium on verifying new Chinese agency partners in late 2024.

One top Chinese advertiser illustrates the holes in Meta's vetting process. Last year, according to one document, Meta found that more than half the ads run by an advertiser called Beijing Tengze Technology Co Ltd broke Meta's rules against deceptive practices. The documents don't detail the products or services that Beijing Tengze was advertising. But the company was on an internal list of Meta's top 200 advertisers worldwide, in the same league as brands such as American Express, BMW and Chanel.

Still, Meta didn't stop doing business with Beijing Tengze, internal documents show. Instead, Meta started charging the company more to advertise. The measure followed a Meta policy that seeks to discourage fraudsters by making them pay a "penalty." Meta told Reuters it later cut ties with Beijing Tengze. It didn't specify when. Chinese business records show the company shut down early this year. A visit by the news agency to what had been its listed address led to a residential street in a mountain town nearly two hours from Beijing. The address, given as the headquarters of one of Meta's top advertisers, turned out not to exist.

Business records show the majority owner of Beijing Tengze was a man named Lin Zedun. Lin also controls several other companies, including Shenzhen Fugaoda Technology Co Ltd, that state they advertise on Facebook and Instagram. Shenzhen Fugaoda is listed as an active business in Chinese registry records. But a visit by Reuters to the official address of that company's headquarters in Shenzhen, in southeast China, led to an empty office with trash on the floor. The building's superintendent told Reuters the company, after missing rent payments, abruptly vacated the office in the spring of 2024.

Reuters couldn't determine where the company went. Lin, the company owner, didn't respond to a request by email for comment. Several months after leaving its headquarters, Shenzhen Fuguoda was again active, posting ads on a Chinese job site to hire specialists in social media advertising and e-commerce. "Priority will be given to those with experience in distributing small black goods in Europe and America," the ad said, using common Mandarin slang for black-market products.

Early this year, as part of its effort to maintain the level of fraud it had deemed tolerable, Meta began adjusting the commissions it paid to Chinese ad agencies, a document states. The new payments are meant to account for the quality of ads the agencies place: If they bring too many scams or false advertisers, Meta will pay them less. The change doesn't appear to have altered many agencies' tactics.

In May, for example, Meta staffers sampled Chinese ads amid a spike in violations on the platform, one document shows. They found that a collection of 800 advertising accounts in the previous month alone had generated $28 million in ads that violated Meta's rules. The samples, the May 2025 document states, included scams, "deceptive business practices," and ads that violated Meta's prohibitions against marketing for illegal online casinos, sexual content, weapons and animal abuse.

More than 75% of the spending came from accounts enjoying Meta's partner protections, the document shows. In response to that finding, one staffer asked colleagues if Meta intended to punish the big-spending Chinese advertising partners who controlled the accounts. No, another said, because "the revenue impact is too high." Instead, Meta's enforcement team proposed shutting down a small portion of the accounts that human reviews had found to be overwhelmingly running banned ads.

Those accounts, according to the document, represented just $2.8 million of the harmful ads Meta was receiving from the accounts each month. Still, before shutting the accounts down, the safety staffers wanted to confirm that colleagues focusing on ad growth wouldn't object, "given the revenue impact." The Meta spokesperson told Reuters the specific numbers cited in the document weren't final and that enforcement resulted in many dozens of removed accounts. He didn't provide new figures.

The closure of those accounts could help Meta address the current spike in fraud and banned ads, the document said, but it wasn't likely to change any behavior long-term. Advertisers, it noted, could soon reroute their ads through accounts that Meta hadn't shut down. "It's likely the revenue will return," the document concluded.

(Editing by Steve Stecklow and Paulo Prada.)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)