The move follows High Court proceedings in the UK, where the company settled out of court with MoneySavingExpert founder Martin Lewis (pictured).
The social media platform will now offer a reporting option for adverts promoting investment scams, which often use photos of celebrities or endorsements to lure people into putting money into fake schemes.
But the tool will only be available in the UK.
MoneySavingExpert reported that, as a result of the court action, over 1,000 fraudulent and misleading ads have been taken down.
In addition, Facebook agreed to donate £3m to UK charity Citizens Advice, comprising £2.5m in cash and £500,000 in advertisement credit on the firm’s social platform.
The sum will be used to set up the Citizens Advice Scams Action within the next three years, a one-to-one support service.
The initiative will also work to identify, tackle and raise awareness of online scams in the UK.
People in England, Wales and Scotland will also be able to book in-person appointments with the charity at their local Citizens Advice branch.