Video Ad Scam Costing Facebook Up To $40 Million


I’m not sure if Facebook (FB -0.53%) will “like” this one. The tech giant has agreed to pay up to $40 million to advertisers. Furthermore, Facebook was caught inflating videos up to 900 percent.

Initially, a report from the Wall Street Journal in 2016 sparked much interest in the case. Big advertisers were furious. A public response came from the Facebook “Advertiser Help Center”. The tech company stated that the average time users spent watching videos was artificially inflated because it was only taking into account video views of more than three seconds.

facebook video

However, Facebook knew it messed up back in 2016. In an apology from David Fischer, vice president of business and marketing partnerships, Facebook stated:

Many of you may have seen the reports about our video metric miscalculation – I want to provide further clarity on the issue. About a month ago, we found an error in the way we calculate one of the video metrics on our dashboard – average duration of video viewed. The metric should have reflected the total time spent watching a video divided by the total number of people who played the video. But it didn’t – it reflected the total time spent watching a video divided by only the number of “views” of a video (that is, when the video was watched for three or more seconds).

Facebook Pays Out Big

With this in mind, Facebook paid out big. We are talking $40 million big. Although, Facebook denied any wrongdoing in the lawsuit. Facebook stated from the case:

Their allegations are false. In fact, Facebook identified the miscalculated metrics through its own efforts, promptly addressed them, and disclosed them to its advertising clients and the public.

However, this recent lawsuit about the Facebook videos is the least of their worries. Reportedly, PayPal is dropping out of Libra, Facebook’s new cryptocurrency. Although PayPal isn’t the only company questioning their involvement. Apparently Mastercard and Visa are reconsidering their partnerships as well.