The other side of Meta’s fraud problem

News from the customer acquisition cost (CAC) crunch. Oddity plunges 53% after ad issue drives abnormal CAC surge, sees 30% Q1 sales hit.

The company said algorithm changes at a key ad partner diverted its campaigns into “lower quality auctions at abnormally high costs,” leading to a significant increase in new user acquisition expenses.

And Oddity Tech falls again after bull ratings are pulled on Wall Street (ODD:NASDAQ)

Oddity Tech (ODD) went into freefall on Wednesday after the company disclosed that it experienced significant abnormal increases in its new user acquisition cost. The company said the unprecedented dislocation was with the large advertising partner Meta Platforms (META), which it believes is due to recent changes in its algorithm.

The changes on the Meta side that cause outcomes like this are not just about the algorithms—they also involve policy choices. Meta deliberately runs a scam-friendly advertising system in order to have more bidders in the system and drive up costs for all the other advertisers. In this case, they probably messed up. Instead of using the fraud ads to turn up CACs slowly for every advertiser, for some reason a single large advertiser got hit hard.

Oddity Tech sells cosmetics, so is probably up against a bunch of fraudulent competitors in the internal Meta ad auctions. Easy “AI” tools and services keep getting better at generating human faces, which lowers the barriers to entry for a small, easy-to-ship item. A surge in fraudulent offers in Oddity’s category could explain why Meta whacked them so hard. The question now is: will Oddity try to smooth things over and go back to being slowly squeezed like all the other Meta advertisers, or is there finally a plaintiff for that long-awaited Meta fraud case?

More: A marketing moment to remember

Update

A shareholder lawsuit was filed on March 12, 2026: ODDITY Tech Ltd. Class Action Lawsuit – ODD – Investor Losses & Lead Plaintiff Deadline

The legal theory is straightforward: investors allege the company was already seeing these adverse dynamics in the second half of 2025 while continuing to market the digital model as strong, stable, and scalable.

(Which other brands are over-reliant on Meta and likely to be defendants in future cases?)

Bonus links

This App Warns You if Someone Is Wearing Smart Glasses Nearby by Joseph Cox. A new hobbyist developed app warns if people nearby may be wearing smart glasses, such as Meta’s Ray-Ban glasses, which stalkers and harassers have repeatedly used to film people without their knowledge or consent. The app scans for smart glasses’ distinctive Bluetooth signatures and sends a push alert if it detects a potential pair of glasses in the local area.

Keep your ads away from toxic content People view a brand up to 19% more negatively if their online ads are placed next to unsafe or objectionable content (e.g. racist or homophobic content).

How in the Hell Did Joann Fabrics Die While Best Buy Survived? It Wasn’t Amazon by Dave Deek. If we misdiagnose Joann as a story about consumer preferences or e-commerce disruption, every downstream decision, from unemployment policy to pension allocation, starts from the wrong premise.

Informed Guesswork by Brian Jacobs. On 23rd January, ‘Private Eye’ reported, in the context of several states considering banning under 16s from social media: Both META and Snapchat have said there is a significant margin of error when seeking to determine whether a user is in fact under 16. And yet the platforms sell on the basis that they can tell advertisers exactly who their ads reach, on a one-to-one, minute-by-minute basis.