A consumer watchdog alleges that Meta knowingly profited from fraudulent advertising while misleading users about its efforts to fight scams
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The Consumer Federation of America filed a class-action complaint against Meta $META in the Superior Court of the District of Columbia, alleging the social media company misled users about its efforts to combat scam advertising on Facebook and Instagram while profiting from those ads.
The lawsuit, brought on behalf of CFA and a proposed class of D.C. Facebook users, invokes the D.C. Consumer Protection Procedures Act and seeks damages, recovery of illegal profits, and injunctive relief. The complaint alleges that rather than blocking advertisers it had identified as higher risk, Meta charged those advertisers more — increasing revenue while exposing users to fraud.
According to the complaint, Meta internally projected in 2024 that about 10% of its annual revenue — roughly $16 billion — would come from scam ads, illegal gambling, and the sale of prohibited goods. The complaint also alleges that Meta showed users 15 billion "higher risk" scam ads per day, earning an annualized $7 billion in revenue from that activity, according to Reuters, which cited internal company documents it had previously reported on.
The CFA complaint includes examples of alleged scam ads found in Meta's ad library, such as promotions for a "free government iPhone" and offers of $1,400 checks to people born in certain years. Many of the ads use AI-generated video, according to Engadget.
Chinese business partners are also implicated in the complaint, which accuses Meta of knowingly maintaining a revenue-generating arrangement with digital advertising middlemen — operating through so-called "agency accounts" — even as that arrangement enabled fraudulent ads to reach users.
"As Americans lose more and more money to online scams, Meta has consistently chosen to prioritize profit over the safety of their users," Ben Winters, CFA's director of AI and data privacy, said in a statement. "Congress has failed to hold Meta accountable, the Trump administration has become a Big Tech lobbying firm, and State AGs are stretched thin."
A Meta spokesperson pushed back on the suit, telling CBS News that the company intends to contest the claims. "These allegations misrepresent the reality of our work and we will fight them," the spokesperson said. In figures cited by the company, 159 million scam ads were pulled from its platforms in the past year — the vast majority before any user flagged them — and more than 10 million accounts tied to organized criminal scam operations were shut down.
CFA, a nonprofit based in Washington, D.C., previously published a report estimating that Americans lose more than $119 billion per year to online scams. D.C. residents lose an estimated $2.1 billion annually — the highest per capita figure in the country, the organization said.
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