Meta Sued for Scam Ads, Supplement Sellers Beware - DirectPayNet

Meta Sued for Scam Ads, Supplement Sellers Beware

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Facebook owner Meta is in trouble. And it’s not just trouble from users suing them for privacy infringement. This time, Facebook is being sued for promoting scam advertisements.

The supplement industry is one of the largest that utilizes celebrity endorsements and imagery to promote their pills. Is your business in trouble?

“False or Misleading Conduct and Representations by the Advertisers”

That’s a direct quote from the Sydney-based watchdog agency, Australian Competition & Consumer Commission (ACCC), who are filing Federal Court proceedings against Meta.

ACCC Chair Rod Sims, claim Meta Facebook’s parent company, is responsible for the ads that end up being published on the social media platform.

Facebook has strict algorithms and policing technologies to flag and remove ads that violate its terms. However, scam ads appeared anyway, leading people and investigators to believe Meta allowed it on purpose.

The gist of the lawsuit in Australia is that scammers were publishing ads on Facebook using images of politicians and other prominent Australian public figures to “endorse” their ads and the Australian Competition and Consumer Commission alleges that Meta platforms allowed it. The celebrities mentioned include Businessman Dick Smith, the TV presenter David Koch, and former NSW premier Mike Baird.

This gets into other issues, like a lack of consent from those celebrities (even if the photos were publicly available). But for the sake of this lawsuit, the cards fall onto Meta’s lap.

Ironically, this isn’t the first time Facebook has gone under fire in Australia for this exact reason. The previous time was in 2019 by businessman Andrew Forrest. Now, the consumer watchdog is joining Forrest, filing against the social media giant to stop ruthless scammers from running similar ads and halt their money-making schemes.

We’re not a news agency, but if you’d like to read a bit more on the ordeal, click here.

Not All the Blame Falls onto Meta

But that doesn’t mean the scammers, themselves, are not to blame. Responsibility falls onto the ones publishing scam advertisements, too, but in terms of this competition watchdog lawsuit, the focus remains on Meta and Facebook.

Ad publishers should be even more leery of what they publish. Regulations for supplement sellers are already quite strict, but here’s the thing: consumers don’t know that. They see something, then they believe it. That’s how you make a sale.

Your business could be in danger. Now’s the time to double check your ads.

Can a Scam Crypto Ads Lawsuit Affect Other Industries?

Yes. The bigger picture isn’t the industry taking advantage of Facebook users, it’s the platform and method in which the scam succeeded.

What we haven’t mentioned yet is that this lawsuit is in reference to cryptocurrency fake ads. WAIT—before you close this tab, the heart of the matter isn’t about crypto or bitcoin. It’s about:

  • advertising tactics (fake schemes/deceptive conduct)
  • potential regulatory changes
  • flags, chargebacks, takedowns

These three things affect every high-risk industry, especially supplements. Let’s break it down more.

Endorsements Are Risky

When it comes to advertising, diet pill makers are often caught between a rock and a hard place.

On the one hand, they want to say that their products can help consumers lose weight quickly, but on the other hand, they know that if they make direct claims about their product’s effectiveness, the FTC (for US sellers) or other regulatory entities are likely to challenge them.

Testimonials and endorsements are always a tricky area for advertisers, but particularly so in the diet pill industry, where marketers make lots of claims that are hard to prove.

Adding celebrity endorsements to those claims adds a few other risk factors. First, if your product comes under fire, then it affects the celebrity. Second, if the celeb comes under fire, your business suffers. Third, are you truly monitoring how that celebrity is endorsing your brand outside of your own ads?

Risk of Fraud = New Rules

By now, you’re probably familiar with how strict regulatory bodies are when it comes to preventing fraud. With this new Meta crypto lawsuit, you could expect even more rules and regulations to arise.

The supplement industry is huge — $37 billion annually, according to the Nutrition Business Journal. Unfortunately, it’s not immune to the same kind of fraud that plagues all other industries.

In addition, with the increasing popularity of supplements, there could be new rules and regulations in the future that could impact how you sell them, both online and offline.

We don’t just mean from the FTC or agencies of this sort; we also mean on social media platforms. Meta will want to cover its ass, so it doesn’t run into issues like this again in the future. The best way to do it is by building up new walls with which to further confine advertisers.

Start getting into the habit of checking your ads. Make sure they tick all the compliance boxes. You wouldn’t want them to suddenly get taken down or your account removed.

The Persistent Threat of Chargebacks

We talk a lot about chargebacks here, and for good reason.

Let’s take a step back and look at this scenario: a Facebook user clicks your ad and buys your diet pill. Two months later, they see “celebrity endorsement ad scams on Facebook” trending online or on the news.

You sell a supplement, which has a wide range of possible results. Do you think that user is going to call you up and say, “hey, was that ad I clicked a scam or is your product real?” Or do you think they’re going straight to the bank and demanding their money back.

Whether they’re experience positive results for your product or not, they’re more than likely going to freak out and try to get their money back. That’s a chargeback for you.

Be prepared, play by the rules, and stay in the know when it comes to dos and don’ts of advertising.

What You Can Do to Quell Customer Fears

The last thing you want is an uprising or an exodus. Here are some tips to keep your customers calm, your bank account growing, and your payment processor happy.

Email Your Customers

You know who’s clicked and purchased from ads on social media. When a lawsuit comes up like this and you sense some unrest within your customer base, don’t hesitate to send an email.

Getting in touch with your customers like this is helpful, anyway. It not only shows them that you’re a real business, but also that you value them as a customer.

Respond to Reviews

Good reviews, bad reviews, customer questions. All of these should be a priority for someone on your team. You want to be on top of anything and everything related to your brand.

As a supplement seller, you’re already under the watchful eye of regulators. Don’t let poor customer relations add to an argument that could lead to shutting down your business.

Notify for Packaging Updates

When keeping up with all the latest rules about your packaging or advertising, why not send a quick notification to your customers?

A simple “new look” email will do the trick. You could tie into why you’ve made the changes or keep it plain. Either way, customers will appreciate the notice and may even have some constructive feedback for you.

Honesty in Advertising Will Lead to Success

It’s as simple as that.

And you know what else it helps? Keeping your chargeback ratio low. And that helps you stay on your payment processor’s good side.

Operating in a high-risk industry means you need a high-risk merchant account to match. All those clicks and high ad spend mean nothing if customers can make a purchase.

Open an account today with DirectPayNet. Call or write to get started.

 

About the author

As President of DirectPayNet, I make it my mission to help merchants find the best payment solutions for their online business, especially if they are categorized as high-risk merchants. I help setup localized payments modes and have tons of other tricks to increase sales! Prior to starting DirectPayNet, I was a Director at MANSEF Inc. (now known as MindGeek), where I led a team dedicated to managing merchant accounts for hundreds of product lines as well as customer service and secondary revenue sources. I am an avid traveler, conference speaker and love to attend any event that allows me to learn about technology. I am fascinated by anything related to digital currency especially Bitcoin and the Blockchain.


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