Most business owners assume that if an ad is approved by Google or Meta, it is safe.

The thinking is simple: trillion-dollar platforms with sophisticated compliance systems would not allow ads that expose advertisers to legal risk.

That assumption is wrong, and it is one of the most dangerous mistakes an advertiser can make.

The digital advertising market operates on a legal double standard.

A federal law known as Section 230 shields platforms from liability for third-party content, while strict liability places responsibility squarely on the advertiser.

Even agencies have a built-in defense. They can argue that they relied on your data or instructions. You can’t.

In this system, you are operating in a hostile environment.

• The landlord (the platform) is immune.
• Bad tenants (scammers) inflate the cost of participation.
• And when something goes wrong, regulators come after you, the responsible advertiser, not the platform, and often not even the agency that built the ad.

Here is what you need to know to protect your business.

Note: This article was sparked by a recent LinkedIn post from Vanessa Otero regarding Meta’s revenue from “high-risk” ads. Her insights and comments in the post about the misalignment between platform profit and user safety prompted this in-depth examination of the legal and economic mechanisms that enable such a system.

The core danger: Strict liability explained

While the strict liability standard is specific to U.S. law (FTC), the economic fallout of this system affects anyone buying ads on U.S.-based platforms.

Before we discuss the platforms, it is essential to understand your own legal standing.

In the eyes of the FTC and state regulators, advertisers are generally held to a standard of strict liability.

What this means: If your ad makes a deceptive claim, you are liable. That’s it.

• Intent doesn’t matter: You can’t say, “I didn’t mean to mislead anyone.”
• Ignorance doesn’t matter: You can’t say, “I didn’t know the claim was false.”
• Delegation doesn’t matter: You can’t say, “My agency wrote it,” or “ChatGPT wrote it.”

The law views the business owner as the “principal” beneficiary of the ad.

You have a non-delegable duty to ensure your advertising is truthful.

Even if an agency writes unauthorized copy that violates the law, regulators often fine the business owner first because you are the one profiting from the sale.

You can try to sue your agency later to get your money back, but that is a separate battle you have to fund yourself.

The unfair shield: Why the platform doesn’t care

If you are strictly liable, why doesn’t the platform help you stay compliant? Because they don’t have to.

Section 230 of the Communications Decency Act declares that “interactive computer services” (platforms) are not treated as the publisher of third-party content.

• The original intent: This law was passed in 1996 to allow the internet to scale, ensuring that a website wouldn’t be sued every time a user posted a comment. It was designed to protect free speech and innovation.
• The modern reality: Today, that shield protects a business model. Courts have ruled that even if platforms profit from illegal content, they are generally not liable unless they actively contribute to creating the illegality.
• The consequence: This creates a “moral hazard.” Because the platform faces no legal risk for the content of your ads, it has no financial incentive to build perfect compliance tools. Their moderation AI is built to protect the platform’s brand safety, not your legal safety.

The liability ladder: Where you stand

To understand how exposed you are, look at the legal hierarchy of the three main players in any ad campaign:

The platform (Google/Meta)

**Legal status: **Immune.

They accept your money to run the ad. Courts have ruled that providing“neutral tools” like keyword suggestions does not make the platform liable for the fraud that ensues.

If the FTC sues, they point to Section 230 and walk away.

The agency (The creator)

• **Legal status: **Negligence standard.

If your agency writes a false ad, they are typically only liable if regulators prove they “knew or should have known” it was false.

They can argue they relied on your product data in good faith.

You (The business owner)

• **Legal status: **Strict liability.

You are the end of the line.

You can’t pass the buck to the platform (immune) or easily to the agency (negligence defense).

If the ad is false, you pay the fine.

The hostile environment: Paying to bid against ‘ghosts’

The situation gets worse.

Because platforms are immune, they allow “high-risk” actors into the auction that legitimate businesses, like yours, have to compete against.

A recent Reuters investigation revealed that Meta internally projected roughly 10% of its ad revenue (approximately $16 billion) would come from “integrity risks”:

• Scams.
• Frauds.
• Banned goods.

Worse, internal documents reveal that when the platform’s AI suspects an ad is a scam (but isn’t “95% certain”), it often fails to ban the advertiser.

Instead, it charges them a “penalty bid,” a premium price to enter the auction.

You are bidding against scammers who have deep illicit profit margins because they don’t ship real products (zero cost of goods sold).

This allows them to bid higher, artificially inflating the cost per click (CPC) for every legitimate business owner.

You are paying a fraud tax just to get your ad seen.

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The new threat: The AI trap

The most urgent risk for 2026 is the rise of generative AI tools (like “Automatically Created Assets” or “Advantage+ Creative”).

Platforms are pushing you to let their AI rewrite your headlines and generate your images. Do not do this blindly.

If Google’s AI hallucinates a claim, you are strictly liable for it.

However, the legal shield for platforms is cracking here.

In cases like Forrest v. Meta, courts are seeing that platforms may lose immunity if their tools actively help “develop” the illegality.

We have seen this before.

In cases like CYBERsitter v. Google, courts refused to dismiss lawsuits when the platform was accused of “developing” the illegal content rather than just hosting it.

If the AI writes the lie, the platform is arguably the “developer,” which pierces their initial immunity shield.

This liability extends to your entire website.

By default, Google’s Performance Max campaigns have “Final URL Expansion” turned on.

This gives their bot permission to crawl any page on your domain, including test pages or joke pages, and turn them into live ads.

Google’s Terms of Service state that the “Customer is solely responsible” for all assets generated, meaning the bot’s mistake is legally your fault.

Be cautious of programs that blur the line.

Features like the “Google Guaranteed” badge can create exposure for deceptive marketing.

Because the platform is no longer a neutral host but is vouching for the business (“Guaranteed”), regulators can argue they have stepped out from behind the Section 230 shield.

By clicking “Auto-apply,” you are effectively signing a blank check for a robot to write legal promises on your behalf.

Risk reality check: Who actually gets investigated?

While strict liability is the law, enforcement is not random. The FTC and State Attorneys General have limited resources, so they prioritize based on harm and scale.

• If you operate in dietary supplements (i.e., “nutra”), fintech (crypto and loans), or business opportunity offers, your risk is extreme. These industries trigger the most consumer complaints and the swiftest investigations.
• If you are an HVAC tech or a local florist, you are unlikely to face an FTC probe unless you are engaging in massive fraud (e.g., fake reviews at scale). However, you are still vulnerable to competitor lawsuits and local consumer protection acts.
• Investigations rarely start from a random audit. They start from consumer complaints (to the BBB or attorney generals) or viral attention. If your aggressive ad goes viral for the wrong reasons, the regulators will see it.

International intricacies

It is vital to remember that Section 230 is a U.S. anomaly.

If you advertise globally, you’re playing by a different set of rules.

• The European Union (DSA): The Digital Services Act forces platforms to mitigate “systemic risks.” If they fail to police scams, they face fines of up to 6% of global turnover.
• The United Kingdom (Online Safety Act): The UK creates a “duty of care.” Senior managers at tech companies can face criminal liability for failing to prevent fraud.
• Canada (Competition Bureau): Canadian regulators are increasingly aggressive on “drip pricing” and misleading digital claims, without a Section 230 equivalent to shield the platforms.
• The “Brussels Effect”: Because platforms want to avoid EU fines, they often apply their strictest global policies to your U.S. account. You may be getting flagged in Texas because of a law written in Belgium.

The advertiser’s survival guide

Knowing the deck is stacked, how do you protect your business?

Adopt a ‘zero trust’ policy

Never hit “publish” on an auto-generated asset without human eyes on it first.

If you use an agency, require them to send you a “substantiation PDF” once a quarter that links every claim in your top ads to a specific piece of proof (e.g., a lab report, a customer review, or a supply chain document).

The substantiation file

For every claim you make (“Fastest shipping,” “Best rated,” “Loses 10lbs”), keep a PDF folder with the proof dated before the ad went live.

This is your only shield against strict liability.

Audit your ‘auto-apply’ settings

Go into your ad accounts today.

Turn off any setting that allows the platform to automatically rewrite your text or generate new assets without your manual review.

Efficiency is not worth the liability.

Watch the legislation

Lawmakers are actively debating the SAFE TECH Act, which would carve out paid advertising from Section 230.

While Congress continues to debate reform, you must protect your own business today.

The responsibility you can’t outsource

The digital ad market is a powerful engine for growth, but it is legally treacherous.

Section 230 protects the platform. Your contract protects your agency.

Nothing protects you except your own diligence.

That is why advertisers must stop conflating platform policy with the law.

• Platform policies are house rules designed to protect revenue.
• Truth in advertising is a federal mandate designed to protect consumers.

Passing the first does not mean you are safe from the second.

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