Facebook has settled its legal action against a New Zealand social media company over fake "likes" on Instagram.

Settlement documents, just revealed by a California court, say Upper Hutt company Social Media Series Limited artificially inflated the popularity of photos and accounts on Facebook-owned Instagram, despite repeated warnings from the tech giant.

In its initial court filing in Apri l this year, Facebook said the operation may have raked in US$9.4m from its fake-engagement scheme, violating 1980s federal cybersecurity law - and indicated it would seek that amount in damages.

US media pundits saw Facebook embarking on a campaign to clampdown on fake likes on Instagram - with an Upper Hutt posse of Kiwi social media consultants the unlucky choice of target to be made an example of.


However, the final settlement is more modest in scope - if daunting for a small New Zealand company.

The deal - a portion of which must be approved by a judge - bans the three individuals who ran the company from Facebook's services and requires the defendants to pay US$500,00 ($811,000), according to court documents filed in federal court in California.

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Social Media Services has three director shareholders: Arend Alexander Hubert Nollen of Upper Hutt, Leon Francis Hedges of Upper Hutt and David James Pekka Pasanen of Lower Hutt. Its registered business address is a private home.

SMS is still listed on the Companies Office, though the two websites it ran promoting its services at the time of Facebook's legal action, Likesocial.co and IGFamous.net are now offline.

Today, the Washington Post reported that the SMS settlement illustrates the early potential of Facebook's platform enforcement and litigation team, which launched this year. In that time, it has filed a total of six lawsuits against malicious actors that it alleges have broken its rules, including threatening users with scams, violating their privacy or posing other real-world harms.

The penalty shows how Facebook's new legal team is "dedicated to furthering the company's enforcement efforts," said Jessica Romero, a former prosecutor who oversees the team.

However, the landscape has also changed since Facebook's first wave of legal action in April.


Facebook recently started an experiment in several countries - including New Zealand - that sees the number of likes no longer display by an Instagram post.

A trial will shortly begin with the same measure on Facebook itself.

The move has been pitched as a measure to relieve social pressure, but it also robs social media marketers and influencers of a key measure of their power. As such, cynics see it as a move to bolster Facebook's profit.

For Facebook, safeguarding its social network remains one of its most fundamental challenges: The very features that allow users to share posts and photos freely or take advantage of third-party apps can easily become vectors for fraud, misinformation and privacy abuses, putting people in jeopardy - and earning the scorn of regulators.

Photo / 123rf
Photo / 123rf

The enormity of its task became apparent last month, when court documents in a fight between Facebook and the state of Massachusetts revealed that the company discovered tens of thousands of apps that may have broken its rules, some of which may have improperly handled users' personal data. Facebook discovered the potential abuse as a result of an internal investigation it launched after the Cambridge Analytica scandal.

That same app review also has resulted in at least three lawsuits brought by Romero's team, the company said in recent weeks.


In August, Facebook took aim at two developers - one in Hong Kong, and another in Singapore - who allegedly created tools available on Google's app store that infected smartphones with malware for the purpose of creating fake clicks on Facebook ads. Another brought in March charged that two Ukranian men used duplicitous software, which could be installed on a user's browser, to scrape information from Facebook users' profiles. Both are pending resolution in court.

Romero said Facebook planned to target "anything that impacts our user safety whether it be because of privacy reasons, fraud or misleading information on our platforms."

Nollen, Hedges and Pasanen, who did not respond to requests for comment in April, could not be immediately contacted for comment on the settlement.

With reporting by the Washington Post.