Why Meta has been sued by a California county
What's the story
California's Santa Clara County has filed a lawsuit against Meta Platforms, the parent company of Facebook and Instagram. The lawsuit accuses Meta of profiting from fraudulent advertisements on its platforms, in violation of California's false advertising and unfair business practices laws. The county is seeking restitution, civil damages, and an injunction against Meta to prevent further unfair business practices.
Revenue claims
County claims Meta made $7B annually from 'high-risk' ads
The lawsuit cites leaked internal documents to claim that Meta generated as much as $7 billion annually from "high-risk" scam ads. These are ads that clearly appear fraudulent. Instead of cracking down on these deceptive advertisers, the county alleges that Meta tolerated their actions and even set up "guardrails" to block efforts aimed at reducing scams, if they were too costly for the company.
Fraud epidemic
Allegations of facilitating fraud on a massive scale
The lawsuit alleges that Meta has played a major role in spreading fraud. It claims the company has allowed middlemen to sell accounts for placing ads that were shielded from enforcement. The county also accuses Meta of targeting scam ads at users who had previously clicked on similar fraudulent offerings, further contributing to the problem.
AI involvement
Generative AI systems used to create scam ads
The lawsuit says that Meta's generative artificial intelligence systems often help dishonest advertisers create ads for scams. This allegation was made after Reuters testing found evidence of such practices. The county has enlisted three outside law firms to assist with the case against Meta, but will maintain full control over case-related decisions and only pay these firms if they win.
Company defense
Meta says it will fight the allegations
In response to the lawsuit, Meta has said it will fight the allegations. "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 Meta spokesperson Andy Stone. He added, "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."