Facebook sues developer for making software that helped advertisers promote COVID-19, crypto scams

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Facebook said Thursday that it has filed suit against the founder of a software firm whose tools allegedly helped scammers run deceptive ads on the social media giant's platform.

According to a Thursday announcement, Facebook is suing Basant Gajjar, founder of a company called LeadCloak, for selling "cloaking" software to disrupt the platform’s automatic ad review system. Cloaking allows scammers to hide the nature of the product being advertised, the announcement explained. While users might see one product in the ad, the ad would actually take them to a website for a completely different product.

As the post explained:

"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."

"In addition to today’s filing, we have taken technical enforcement measures against Leadcloak and accounts that we’ve determined have used their software, including disabling personal and ad accounts on Facebook and Instagram," wrote Jessica Romero, Facebook's director of platform enforcement and litigation. "This suit will also further our efforts to identify Leadcloak’s customers and take additional enforcement actions against them."

As Reuters reported, the lawsuit was filed in the U.S. District Court for the Northern District of California.

Last May, Facebook notably altered its advertising policies to make it easier to get crypto ads approved – specifically those related to education, events and news – after banning such placements entirely in 2018. Advertisements that promote cryptocurrencies are still subject to more stringent approval.

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May 5, 2022, 3:17PM UTC
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