META Meta Platforms Inc

By Lara O'Reilly 

Facebook Inc. has pledged to crack down on scam ads with a new reporting tool that lets users flag suspected fraudulent schemes.

Scam ads often use images of celebrities and other high-profile personalities without their permission to trick users with get-rich-quick schemes and other frauds.

The tool, set to roll out in May, will only be available to users in the U.K. at launch, Facebook said Wednesday. Facebook will also dedicate an internal team to handle the user reports and study scams to improve enforcement, the company said.

"It's very imaginable we would take this out to other markets" if the tool proves to be effective, said Steve Hatch, Facebook's regional director for Northern Europe, at a press conference Wednesday.

The announcement follows a defamation lawsuit filed against Facebook in London's High Court in April 2018 by Martin Lewis, a U.K. TV personality and the founder of MoneySavingExpert.com, a consumer-finance website.

Mr. Lewis had sought damages from Facebook after it allegedly failed to remove ads that used his name and image to lure people into paying for scams. One ad cited in the court papers promoted a "Martin Lewis' GBP500,000 Tax Free Loophole" and depicted Mr. Lewis holding a large check.

The lawsuit claimed the fake endorsements had seriously damaged Mr. Lewis's reputation and that he had "been caused substantial upset and distress."

Crediting the action Facebook has now taken, Mr. Lewis said Wednesday he is dropping the lawsuit. He has worked with the company and U.K. consumer charity Citizens Advice to set up a new project, dubbed Citizens Advice Scam Action, or CASA, that aims to tackle advertising scams.

Facebook said it would donate GBP2.5 million ($3.3 million) to help fund the project over the next two years, and a further GBP500,000 in Facebook advertising credits, to be issued over the next three years.

To be sure, scam ads aren't confined to the U.K., or to Facebook. This month, for example, U.S. model and social-media personality Chrissy Teigen complained that her image was being used to falsely endorse weight-loss supplements on Snapchat. Snapchat said it suspended the advertiser and has a zero-tolerance policy toward fake celebrity endorsements.

Mr. Lewis said other companies -- including Alphabet Inc.'s Google and Yahoo, now part of AT&T Inc.'s Verizon Media -- should do more to combat deceptive ads.

"Because we want the ads people see on Google to be useful and relevant, we take immediate action to prevent fake and inappropriate ads," said a Google spokesman, adding that the company removed 3.2 billion such ads in 2017.

Verizon Media didn't immediately respond to a request for comment.

Scam ads make consumers distrust advertising, said Mr. Lewis.

"For any company who does advertising in the U.K. legitimately trying to get their message across, this is diluting what you are doing," he said. "So the advertising industry as a whole, not just the platforms, [needs] to try to make sure this stops."

Facebook said scam ads have never been allowed on its platform and that it has long worked to tackle the issue, including by disabling fake accounts and using automated and manual reviews. In June last year, for example, the social-media giant rolled out a feedback feature as part of an initiative to crack down on e-commerce businesses that advertise products that are unsatisfactory or don't arrive on time. Facebook said it disabled 754 million fake accounts in the third quarter of 2018.

rite to Lara O'Reilly at lara.oreilly@wsj.com

(END) Dow Jones Newswires

January 23, 2019 11:16 ET (16:16 GMT)

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