Meta profited from illegal scam ads, California county lawsuit alleges | Meta
Santa Clara County, California, sued Meta Platforms, claiming it profited from Facebook and Instagram ads that promoted fraud in violation of California’s false advertising and unfair business practices laws.
The lawsuit, filed Monday in Santa Clara County Superior Court on behalf of all California residents, accuses the social media giant of tolerating false advertising on a global basis. The lawsuit seeks damages, damages and an order prohibiting Meta from engaging in unfair business practices.
Citing leaked internal documents first reported by Reuters last year, the complaint alleges that the company generates as much as $7 billion in annual revenue from so-called “high-risk” scam ads that show clear signs of fraud.
Rather than pursuing a broad crackdown on fraudulent advertisers, the state claims Meta has largely tolerated this abuse and even installed “guardrails” to thwart efforts to reduce fraud if it costs the company too much money.
Meta said he intends to defend himself against the allegation.
“This claim is based on Reuters reporting that distorts our objectives and ignores all the actions we take every day to fight fraud,” Meta spokesman Andy Stone said.
“We aggressively fight scams on and off our platforms because they are not good for us or the people and businesses who rely on our services.”
In the lawsuit, Santa Clara alleges that Meta materially contributed to a fraud epidemic by allowing intermediaries to sell accounts to place sanctions-protected ads and by targeting fraudulent ads to users who had clicked on similar fraudulent offers in the past. Citing Reuters’ testing, the county alleged that Meta’s generative AI systems often aid unethical marketers in creating fraudulent ads.
“The extent of Meta’s abuse has reached an extraordinary level and it must be stopped,” regional counsel Tony LoPresti told Reuters. “As civilian prosecutors in Silicon Valley, we have a special duty to hold tech companies accountable to the law.”
In the complaint, the district considers Meta’s assurance regarding its anti-fraud efforts as part of the alleged misconduct. By assuring users that anti-fraud efforts are its top priority and that it will rigorously review ads for violations of platform policies, the district says Meta deceived the public and concealed the extent to which fake ads increased its profits.
“Upon information and belief, Meta may even adjust the fraudulent advertising it allows on its platforms to offset its earnings or meet certain revenue goals,” Santa Clara’s filing states.
Santa Clara’s district attorney is working with three foreign law firms to assist with the case against Meta: Bernstein, Litowitz, Berger and Grossmann; Renne Public Law Group and Bishop Partnoy. But LoPresti said the county will have full control over decisions in the case and the companies will only be paid if the county wins.
