The Australian Competition and Consumer Commission (ACCC) will ask the Federal Court to impose financial penalties on Meta, alleging staff knew the endorsements were fake and the ads promoted scams.
Users who clicked the ads were shown what the ACCC alleges were fake media articles that included prominent Australians making comments endorsing money-making schemes.
Users were encouraged to register for these schemes. Scammers then repeatedly called those who registered and asked them to transfer money.
One person lost more than $650,000 through one of the scams, which was promoted as an investment opportunity.
ACCC Chair Rod Sims said Meta was responsible for the ads it publishes.
"Meta should have been doing more to detect and then remove false or misleading ads on Facebook, to prevent consumers from falling victim to ruthless scammers," he said.
A spokesman for Meta said it had cooperated with the ACCC investigation and would defend the action.
"We don't want to see ads seeking to scam people out of money or mislead people on Facebook," he said.
"They violate our policies and are not good for the community."
The spokesman said Meta uses technology to detect and block scam ads.
The company could not comment on the detail of the ACCC action, he added.
Mining magnate Andrew Forrest published an open letter to Meta owner Mark Zuckerberg in 2019 calling for Facebook to stop accepting ads falsely using his name and face.
He has separate legal action underway.
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