Washington state is taking a second swipe at Facebook (FB), alleging in a new lawsuit that it has “repeatedly” skirted its responsibility to disclose who’s paying for political ads on the social network. If the claim holds true, the state’s attorney general says stakes for the social media giant will be higher this time around.
“Under Washington state law, if you accept political advertising, you must make information available to the public about who bought the ad, what their address is, how many ads they purchased, and how much it cost,” Washington Attorney General Bob Ferguson told Yahoo Finance on Monday.
“We've already gone through this once before,” he added, “and they're still not complying with our laws.”
According to the new lawsuit, since entering into a $239,500 stipulated judgement with the state in 2018 over similar allegations ranging from 2013 to 2018, Facebook has continued to accept payments and run political advertisements for state and local elections in Washington, without making legally required disclosures.
Ferguson said, while not required as part of the stipulated judgement, Facebook represented a week after entering into the stipulation, that it would refrain from running political advertisements in Washington while it looked to address the state’s more strict, amended regulations that at the time were pending, and went into effect December 31, 2018.
“Facebook has to get their house in order,” Ferguson said. “Either don't accept the ads — that's their right — or if they're going to accept the ads, and make a profit off that, make sure they're disclosing the same information that TV stations and small town newspapers must provide.”
In response to the lawsuit, a Facebook representative told Yahoo Finance the company had and hoped to continue working with local authorities to resolve the issue, and had taken steps to strengthen its policy enforcement. The company said its own policies continue to prohibit ads that relate to Washington state or local elected officials, candidates, elections, or ballot initiatives.
‘A number of AGs are watching carefully’
Ferguson’s filing raises questions as to whether political advertising claims could extend beyond Washington, and how much risk isolated or broader claims could pose for Facebook.
Security researchers for New York University’s Tandon School of Engineering Online Political Transparency Project conducted a one-year study — from 2018 to 2019 — that found Facebook had not fully enforced its own advertising policies implemented in the years following security breaches exposed in connection with the 2016 U.S. presidential race.
In July 2019, the Federal Trade Commission (FTC) fined Facebook $5 billion for sharing personal data on approximately 50 million users with data analytics firm Cambridge Analytica, which used it for voter profiling and targeted political advertising. Facebook’s practices also came under scrutiny of the U.S. House of Representatives Select Committee on Intelligence, which in November 2017 concluded that Russian “troll” farm Internet Research Agency (IRA) had created false Facebook accounts and paid for political advertisements published on Facebook and Twitter during the presidential race. In 2018, a federal grand jury indicted IRA for operating pages and groups on Facebook under false U.S. personas.
As one of the company’s measures to prevent foreign and opaque money from influencing U.S. elections, in March 2019 Facebook implemented an Ad Library to store details about the origin and funding behind ads.
“One of the first things that struck us as you began to look at the Ad Library, is it very clearly wasn't really built as a security system,” Laura Edelson, one of the NYU researchers, said. “During the study period, a lot of the measures that were in place to try to ensure that users were informed and that there was transparency, were not really enforced.”
Edelson described the measures as “effectively optional” with disclosure fields consisting of a free text entry field provided by the advertiser provided to tell Facebook users who paid for the ad.
“That wasn't checked in any way,” said Edelson, whose data was shared with Ferguson’s office and who testified before the state’s commission on elections in February. “That’s something that’s very easy for an advertiser who is malicious to evade.”
Under Washington state law, campaign finance violations are punishable by up to $10,000, per offense. An attorney who works under Ferguson explained that because the term “offense” has not been fully defined either by statute or by state case law, it's unclear whether each impression of an offending ad would be considered a separate violation. Therefore, the attorney said, penalties for the 269 ads, so far identified as non-compliant by the attorney general’s investigation, if proven to be in violation, could amount to at least $2.7 million in fines.
Repeat offenders are taken “very seriously,” Ferguson cautioned.
“So the first go-around, settling for $240K should not necessarily be an indicator of what we think an appropriate resolution would be on this second go around that we are having with Facebook,” he said. “And I don't want to suggest that we think that's the end of it, or that's the total amount of the harm that's been done. We will be going through a process to determine if there are additional ads, as well.”
However, what might be illegal in one state, may not be illegal in another state, Ferguson emphasized. When asked whether he had been in contact with other state attorneys general concerning Facebook’s political ads, he said, “I think it's fair to say that AGs, we speak about all sorts of issues all the time, especially high-profile ones. I won't go into details about those conversations for obvious reasons, but I think it is more than fair to say that a number of AGs are watching carefully what's happening here in Washington state with these cases.”
According to Edelson, catching offending Facebook advertisers has become easier, but she’s concerned the window of time for identifying bad actors needs to be further narrowed. Currently, she said, it takes a week or two to identify violations, on average.
“That's absolutely fine, right now,” Edelson said. “But that's not going to be fine the first week of November if it's content that is spreading misinformation about voting procedures during an election, where voting procedures will be changing in the month or two before an election.”
With coronavirus conceivably necessitating changes to how some Americans vote, she says it would not be surprising if social platforms become exploited to spread inaccurate information while defenses are down.
Alexis Keenan is a reporter for Yahoo Finance and former litigation attorney.
Follow Alexis Keenan on Twitter @alexiskweed.