Although Bitcoin is perhaps the most well-known of all cryptocurrencies, there are thousands of so-called "alt-coins." Many attempt to solve real-world business problems, but a sizable amount have no actual product or team, and merely attempt to swindle newcomers hellbent on getting rich quick.
So it isn't surprising that scammers turned to Facebook to post ads for sketchy "initial coin offerings," also called ICOs, or to offer financial advice for products that were similar to a ponzi scheme.
"We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception," Rob Leathern, product management director at Facebook, said in a blog post. "There are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith."
Clayton Moore, CEO at NetCents, a publicly traded company focused on digital payment technology, says previous Facebook policies should have not allowed these ads to run in the first place.
"It was a poor advertising review process that allowed it to happen" Moore says. "Facebook is now looking to fix its ad platform and protect its users from these deceptive ads."
"Other major sites like Reddit have already instituted policies banning shady business practices and self-promotion of ICOs," he adds. "So it's logical to expect all of the big advertising platforms to follow suit."
"I think the big picture here is Facebook is attempting to be more of a social media torch-bearer with respect to becoming more selective in their advertising partnerships," says Peter Marinello, director of the Electronic Retailing Self Regulation Program and VP of the Council of Better Business Bureaus. "It's also trying to create more confidence within their user base that Facebook is committed to policing its space to discourage egregious advertising to proliferate."
Marinello says it wouldn't be surprising if Facebook's rivals, such as Google, take similar measures. "By taking a position of leadership in social media space it will only encourage competitors in the industry to take similar steps to ensure that they're being compliant and cognizant of the pervasive issues that it's users are struggling with," he says.
Meanwhile, Facebook's new policy is intentionally broad, as the company wants to get its hands around on how to better detect deceptive and misleading ads. "Enforcement will begin to ramp up across our platforms including Facebook, Audience Network and Instagram," Leathern said.