257: Scam Capitalism
How Meta Uses Fraud as a Business Model
According to Reuters, Meta appears to have built an advertising system where scams are predictable, measurable, and profitable, and treated as such.
Reuters’ investigations describe internal Meta documents projecting that as much as ten percent of the company’s revenue is linked to scam ads and other prohibited or “high-risk” advertising. The reporting also points to billions of scam-ad impressions delivered daily, internal probability thresholds that allow suspicious advertisers to continue operating, and enforcement practices that appear calibrated to avoid disrupting revenue flows. Meta disputes the characterization, but the material claims persist because they point to something structural rather than accidental. The allegation is not that Meta cannot stop scams, but that it has learned how to live with them.
Authority today is exercised less through law or institutional legitimacy and more through systems that shape attention at scale. Advertising platforms are not passive intermediaries. They are governance systems that decide what appears credible, who is targeted, who is protected, and who absorbs harm. If the Reuters reporting is even broadly accurate, Meta is the single largest private infrastructure enabling it.
Scams turn out to be unusually well suited to the logic of platform advertising. Fraud operators iterate rapidly, test relentlessly, and spend aggressively. They churn identities without hesitation and treat enforcement as a cost of doing business. From the perspective of an automated ad marketplace optimized for engagement and revenue, this behavior looks indistinguishable from that of a highly motivated advertiser, until a line is crossed. If that line is set at extreme confidence thresholds, as Reuters reports, fraud can persist as a revenue stream long before it is stopped.
One of the most unsettling aspects of the reporting is the suggestion that enforcement does not always function as a hard boundary. Instead, suspected risk may be priced in. When suspicious advertisers are allowed to continue operating at higher cost, the moral logic of safety collapses. Prohibition quietly becomes monetization. Fraud is no longer a violation to be eliminated but a behavior to be managed.
Paid placement then performs a second, more corrosive function: legitimacy laundering. Scams thrive on borrowed authority. An ad that appears alongside familiar brands, recognizable public figures, or trusted media environments carries an implicit signal of approval. Meta has replaced newspapers, broadcasters, and storefronts as the primary interface between economic actors and the public. When that interface is saturated with deception, authority collapses from the inside out.
Worse still, algorithmic systems can transform vulnerability into a targeting signal. If someone clicks once, the system may infer interest and show more. What looks like personalization from the platform’s perspective can feel like predation from the user’s. This does not require malicious intent. It emerges naturally when optimization systems are blind to the difference between curiosity, desperation, and harm.
The political reaction to the Reuters reporting is revealing. When senators from opposite parties call on the FTC and SEC to investigate, the issue stops being about content moderation and becomes a question of regulatory legitimacy. Their framing suggests that Meta may have calculated that profits from scam advertising outweigh the risk of penalties or reputational damage. That is a familiar pattern in declining institutions: when enforcement becomes an operating cost, authority becomes theater.
Meta’s response follows a well-worn script. The company points to takedowns, investments in safety tooling, and reported reductions in user complaints. All of this may be true. But none of it resolves the central question raised by the reporting. Is fraud an exceptional failure state, or is it a tolerated baseline within the system? A platform can remove millions of scam ads and still depend on a constant influx of new ones to sustain growth.
The deeper consequence is an inversion of authority. Historically, scams existed at the margins of economic life. Today, they appear embedded in its core infrastructure. When the world’s most powerful communications platforms profit from deception truth loses its default advantage. Responsibility shifts onto individuals to verify everything, trust nothing, and absorb the cost of failure alone.
This is an epistemic crisis. As people lose faith in ads, platforms, and institutions, authority does not vanish. It migrates into cynicism, conspiracy, anger, and force.
Meta presents itself as a neutral platform wrestling with an impossible problem at global scale. The Reuters reporting suggests a darker, more unsettling interpretation. Meta may be the largest scam distribution system in human history, not because it set out to be one, but because fraud fits the system it built.
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