|
Getting your Trinity Audio player ready...
|
Santa Clara County filed a lawsuit against Meta on May 11 alleging that the Menlo Park-based company knowingly enables and profits from a large network of scam advertisements which defraud users on Facebook and Instagram. Meta, the owner of the social media websites, disputes the claims and plans to fight the lawsuit, a Meta spokesperson said.
The lawsuit, filed by Santa Clara County’s legal counsel Tony LoPresti, claims that these scam advertisements bring in $7 billion in revenue for Meta. The complaint alleges that Meta is aware of the scope of the problem, which county counsel says exposes users to 15 billion scam ads across its platforms each day and contributed to $2.5 billion in fraudulent financial losses users in 2024. Seniors are disproportionately impacted by fraudulent ads, according to a press release announcing the suit.
“Meta’s platforms have become a preferred hunting ground for scammers, and our lawsuit alleges that Meta not only knows it, but has put in place systems and tools to ensure it profits from it,” said LoPresti in a Santa Clara County press release. “No corporation is above the law. As civil prosecutors in Silicon Valley, we cannot allow a tech company as powerful as Meta to continue perpetrating a worldwide scheme to deceive consumers.”
A spokesperson for Meta said the company actively combats scam ads.
“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 Tracy Clayton, a company spokesperson. “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. We removed over 159 million scam ads last year alone, launched new tools to protect people, and partnered with law enforcement around the globe to disrupt these criminals. We will fight this lawsuit.”
The complaint is filed in Santa Clara County Superior Court. Santa Clara County characterized the lawsuit as “landmark civil prosecution,” and the county claims that the action is the first of its kind brought by a local civil prosecutor in the nation.
The lawsuit asks the court to halt Meta’s alleged unlawful conduct through injunctive relief, a court-ordered remedy that forces a party to stop a specific action. It also requests restitution for funds lost as a result of the fraudulent actions, and asks the court to impose civil penalties on Meta, including enhanced financial penalties for misconduct affecting older adults and other vulnerable populations.
In November, Reuters reported that Meta projected that roughly 10% of its revenue would come from scam advertisements and banned goods. The reporting was based on internal documents that Reuters reportedly viewed.
According to Santa Clara County’s complaint, Meta’s internal system flags ads that are likely scams ads but, instead of stopping them, charges the scammers a premium price to run the advertisements. The types of scams include fraudulent financial products, cryptocurrency schemes, treatments for incurable diseases, ineffective nutritional supplements and impersonations of celebrities asking for money.
The complaint further alleges that Meta provides artificial intelligence tools that enable scammers to quickly generate fraudulent ads, and that it bolsters these schemes through a network of “trusted” business partners who help scammers appear legitimate. The lawsuit also claims the company has laid off staff dedicated to anti-scam efforts and declined to adopt universal advertiser verification measures used by other tech firms, including Google.
“(Meta) treats potential penalties from regulators as no more than a cost of doing business,” the lawsuit states. “In 2024, when Meta ‘anticipate(d) penalties of up to $1 billion,’ it concluded that those fines would be much smaller than Meta’s revenue from scam ads.’ ”
In 2025, Meta reported revenue of nearly $201 billion, a 22% increase from 2024, and $196 billion of that revenue came from advertisements.
The lawsuit was filed by LoPresti on behalf of the People of the State of California with assistance from outside special counsel Bernstein Litowitz Berger & Grossmann LLP, Bishop Partnoy LLP, and Renne Public Law Group LLP.
