Meta Sued by California County for Profiting from Illegal Scam Ads

The Lawsuit Against Meta

California’s Santa Clara county has sued Meta Platforms, alleging it has profited from Facebook and Instagram ads promoting scams in violation of California’s false advertising and unfair business practices laws.

Allegations of Tolerating Fraudulent Advertising

The lawsuit – filed on Monday in Santa Clara county superior court on behalf of all California residents – accuses the social media giant of tolerating fraudulent advertising on a global basis. The suit seeks restitution, civil damages and an order prohibiting Meta from engaging in unfair business practices.

Revenue from High-Risk Scam Ads

Citing leaked internal documents first reported by Reuters last year, the complaint alleges that the company earned as much as $7bn in annual revenue from so-called “high-risk” scam ads which show clear signs of being fraudulent.

Meta's Response and Defense

Meta said it intends to defend itself against the claim. “This claim relies on Reuters reporting that distorts our motives and ignores the full range of actions we take to combat scams every day,” said a Meta spokesperson, Andy Stone. “We aggressively fight scams on and off our platforms because they’re not good for us or the people and businesses that rely on our services.“

The Impact on Users and the Legal Proceedings

In the suit, Santa Clara alleges that Meta materially contributed to an epidemic of fraud by allowing middlemen to sell accounts to place ads that were protected against enforcement, and targeting scam ads at users who had clicked on similarly bogus offerings in the past. The county will retain full control over decisions involving the case, and outside law firms will only be paid if the county wins.