Marketing 2 min read

Facebook Sues Software Company Founder for Deceptive Ads

Annette Shaff /

Annette Shaff /

Facebook has filed a lawsuit against the founder of a software company for running deceptive ads linked to COVID19 scams on its platform.

In recent months, Facebook has experienced an increase in malicious actors looking to take advantage of users during the pandemic.

Last month, the social media company banned some deceptive ads that claimed to be selling protective masks. Not only were these masks faulty or counterfeit versions, but they were also overpriced.

While Facebook may have successfully removed the mask ads, the process is more challenging than you would think. Here’s why.

Many of the social media company’s contractors can’t work from home due to privacy and legal reasons. As such, Facebook is relying more on an automated system to remove these deceptive ads.

Unfortunately, that’s not easy either. Actors have now designed ways to circumvent the automated review system on Facebook and Instagram.

According to a lawsuit filed in California on Thursday, Basant Gajjar‘s LeadCloak software provides such service.

Running Deceptive Ads to Scam Users on Facebook

LeadCloak offers a cloaking service to users for a fee. Customers can either signup for a “pay-as-you-go” option or pay monthly fees that’s as much as $2,000, according to the lawsuit.

Facebook said that Gajjar’s software pushed misleading ads for diet pills, and drugs, as well as bogus cryptocurrency information.

But, LeadCloak isn’t just targeting Facebook. Other technology companies mentioned in the lawsuit include Google, Oath, WordPress, and Shopify.

Gajjar’s website recommends that advertisers block Facebook and Google IP addresses. That way, they can easily evade both companies’ review of noncompliant landing pages.

According to Facebook, almost 4,202 users have already clicked on an ad showing a landing page promoting stainless steel spoons. Instead, the advertisement took them to a fake news article promoting Bitcoin investment.

The post included the image of local celebrities. And it touted investment in the cryptocurrency as a countermeasure against the economic impact of COVID-19 pandemic.

In addition to asking the court to block LeadCloak services permanently, Facebook is also seeking damages. It includes compensation for resources spent to identify and stop Gajjar’s harmful activities.

Read More: Video Conferencing Application Zoom has Another Security Flaw

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