Meta lawsuit overview:
- Who: Santa Clara County Counsel Tony LoPresti filed a lawsuit on behalf of the People of California against Meta Platforms Inc. and Instagram LLC.
- Why: The complaint alleges Meta knowingly profits from scam ads on Facebook and Instagram while falsely claiming to combat them.
- Where: The Meta lawsuit was filed in California state court.
A new Meta lawsuit alleges the company knowingly profits from scam ads on Facebook and Instagram while falsely claiming to combat them.
The People of the State of California, through Santa Clara County Counsel Tony LoPresti, filed the complaint against Meta Platforms and Instagram on May 11.
The complaint alleges Meta’s platforms account for one-third of all internet scams in the United States, with 15 billion scam ads shown to users daily generating $7 billion in annual revenue that Meta internally labels “violating revenue.”
The Meta lawsuit claims that scammers impersonate major corporations offering deceptive discounts on items such as designer fashion brands and fake concert tickets while also running ads for dangerous health products that Meta expressly represents are prohibited by its advertising guidelines.
“Behind the scenes Meta is actively participating in the creation and targeting of scam ads, snuffing out attempts to combat scam ads and, in fact, profiting from the scam ads it claims to be trying to prevent,” the complaint states.
Rather than banning identified scam advertisers, Meta has charged them a “penalty bid” surcharge since 2024, the Meta lawsuit alleges, after internally concluding anticipated regulatory fines “would be much smaller than Meta’s revenue from scam ads.”
Meta’s Advantage+ AI tool generated thousands of scam ads, lawsuit claims
The Meta lawsuit further alleges that Meta’s Advantage+ AI suite can generate up to 4,000 variations of a single ad, tools scam advertisers exploit to produce more convincing fraudulent content.
The complaint claims Meta promotes more than 2,000 “Business Partners” it describes as vetted experts, some of which openly advertise account-rental services, allowing scammers to cycle through “clean” accounts and evade enforcement.
Furthermore, according to the lawsuit, Meta disbanded its China-focused anti-scam team in 2024 after its success reduced scam revenue too sharply, leading to a resurgence in scam ads on the platform.
Santa Clara County, on behalf of the People of California, is seeking an injunction, restitution and civil penalties for violations of California’s False Advertising Law and Unfair Competition Law.
In related news, a class action lawsuit accuses Meta Platforms of failing to disclose that its AI smart glasses transmit videos to third-party contractors for human review.
What do you think of the allegations made in this Meta lawsuit over scam ads? Let us know in the comments.
The plaintiff is represented by Tony LoPresti, Kavita Narayan, Meredith A. Johnson, Laura S. Trice, Hannah M. Godbey and Bill Nguyen of the Office of the County Counsel for the County of Santa Clara; Avi Josefson, Michael D. Blatchley, Tal E. Avrhami, Carolina Yu, Jonathan D. Uslaner, Anya Freedman and Matthew Arrow of Bernstein Litowitz Berger & Grossmann LLP; Louise Renne, Jonathan V. Holtzman and James Ross of Renne Public Law Group LLP; and Robert E. Bishop and Frank Partnoy of Bishop Partnoy LLP.
The Meta scam ads lawsuit is County of Santa Clara v. Meta Platforms Inc., et al., case number not yet available, in the Superior Court of the State of California, County of Santa Clara.
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