Meta sued over scam ads

The Consumer Federation of America sued Meta on April 21, accusing the company of profiting from scam ads on Facebook and Instagram while telling users it was cracking down. (reuters.com) The proposed class action was filed in Superior Court in Washington, D.C., on behalf of the group and a proposed class of District of Columbia Facebook users under the D.C. Consumer Protection Procedures Act. The complaint seeks damages, recovery of alleged illegal profits, injunctive relief, and a jury trial. (consumerfed.org) Reuters reported that internal Meta estimates cited in the complaint said users saw 15 billion “higher risk” scam ads a day in 2024, producing an annualized $7 billion in revenue. The complaint also says Meta projected that more than 10% of its 2024 revenue, or about $16 billion, would come from scam ads, illegal gambling, and prohibited goods. (reuters.com, consumerfed.org) The case centers on a basic advertising problem: platforms approve and distribute paid posts before most users ever report them. CFA says Meta identified some advertisers as higher risk but charged them higher rates instead of blocking them, which the complaint describes as a revenue decision as much as a safety failure. (finance.yahoo.com, consumerfed.org) The complaint points to specific ad formats that users would recognize from their feeds, including offers for “free government iPhones” and ads promising $1,400 checks to people born in certain years. It also alleges that some scam campaigns used artificial-intelligence-generated video to make the pitches look more convincing. (finance.yahoo.com) The lawsuit also revives scrutiny of Meta’s ad-sales system in China. Reuters said the complaint alleges Meta tolerated scam-ad activity by digital ad middlemen using “agency accounts,” a setup the suit says helped fraudulent advertisers keep buying reach at scale. (reuters.com) Meta said it would contest the case. A company spokesperson told Reuters, “These allegations misrepresent the reality of our work and we will fight them,” and pointed to a March announcement expanding advertiser verification and restricting some financial-services ads from sending users into private messages. (reuters.com, about.fb.com) Meta has also said it removed 159 million scam ads in the past year and shut down more than 10 million accounts tied to organized scam operations. CFA argues those enforcement numbers sit alongside a much larger volume of scam ads that still got approved and shown. (finance.yahoo.com) CFA’s own report estimates Americans lose more than $119 billion a year to online scams, and the group says District residents lose about $2.1 billion annually, the highest per-capita level in the country. That gives the D.C. filing a local hook, even though the ads at issue ran on global platforms. (consumerfed.org, finance.yahoo.com) The case now turns on whether a court treats Meta’s anti-scam statements as marketing promises covered by consumer-protection law, or as broader platform-safety claims that do not create liability. For users and businesses that buy reach on Facebook and Instagram, the lawsuit puts the ad system itself on trial. (consumerfed.org, reuters.com)