Daily fraud update: 13th April

Chris Lee

Facebook launches lawsuit over alleged deceptive adverts

Facebook logo on a laptop screen

 Social networking giant Facebook has brought about a lawsuit against a man who ran a company accused of bringing about fake adverts on the platform.

It is suing Basant Gajjar, a man who ran a firm called LeadCloak.

Gajjar allegedly provided software to advertisers who wanted to get around some of the website’s advertising review systems – a practice known as “cloaking”.

The ad review set-up on Facebook is designed to give the social networking giant some oversight of what people were paying to promote, and to lay down rules.

According to the allegations, LeadCloak was an example of a service which helped users promote adverts which seemingly were for one product but then ended up being for another.

It is accused of having helped advertisers who wanted to offer cryptocurrency scams, Facebook said.

Other alleged products which LeadCloak managed to help advertisers promote included diet pills as well as coronavirus-related items.

The lawsuit has been filed in a US federal court based in the state of California.

Press reports suggest that Basant Gajjar is based in Bangkok in Thailand.

According to a statement from Facebook, Gajjar broke the site’s terms.

“Using the name ‘LeadCloak’, Gajjar violated Facebook Terms and Policies by providing cloaking software and services designed to circumvent automated ad review systems, and ultimately run deceptive ads on Facebook and Instagram”, said Jessica Romero, who is the site’s Director of Platform Enforcement and Litigation.

“LeadCloak’s software also targeted a number of other technology companies including Google, Oath, WordPress, Shopify, and others.”

Romero’s statement also went on to explain how cloaking works – and how it can lead users of the site to click on a promotional link to one item but end up on the website of something else.

“Cloaking is a malicious technique that impairs ad review systems by concealing the nature of the website linked to an ad”, she said.

“When ads are cloaked, a company’s ad review system may see a website showing an innocuous product such as a sweater, but a user will see a different  website, promoting deceptive products and services which, in many cases, are not allowed”, she added.

She confirmed that crypto scams were on the alleged list of offerings.

“In this case, Leadcloak’s software was used to conceal websites featuring scams related to COVID-19, cryptocurrency, pharmaceuticals, diet pills, and fake news pages. Some of these cloaked websites also included images of celebrities”, she said.

Looking to the future, Romero also outlined the steps that the firm intended to take next – including going further down the chain of clients.

“This suit will also further our efforts to identify Leadcloak’s customers and take additional enforcement actions against them”, she explained.

Facebook is one of the world’s most famous social networking websites, and as a result it has built a powerful advertising system.

However, alleged crypto scams have been located on the site many times before.


Chris Lee

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