Santa Clara County filed a lawsuit against Meta $META on Monday, accusing the social media company of profiting from fraudulent ads on Facebook and Instagram in violation of California's false advertising and unfair business practices laws.
The complaint, filed in Santa Clara County Superior Court on behalf of all California residents, seeks restitution, civil damages, and a court order prohibiting Meta from engaging in unfair business practices. According to the complaint, Meta's revenue from so-called "high-risk" advertising — ads that displayed obvious indicators of fraud — may have totaled as much as $7 billion in a single year.
Internal documents, first surfaced by Reuters and cited extensively in the filing, form the backbone of the county's argument that Meta deliberately capped its own enforcement activity whenever anti-fraud measures risked cutting into ad income. Among the specific practices cited in the complaint: third-party brokers were permitted to sell ad accounts that carried protection from removal; users who had engaged with dubious ads were then served more of the same; and the county says Reuters' own testing revealed that Meta's AI-powered creative tools could be used to generate promotional content for fraudulent schemes.
Woven through the complaint is the claim that Meta's public reassurances about ad safety — including statements framing fraud enforcement as a priority — masked the extent to which the company was financially dependent on the very ads it claimed to be policing. "On information and belief, Meta can even adjust the flood of scam ads it allows on its platforms in order to smooth its earnings or hit specific revenue targets," the filing states.
"The scale of Meta's misconduct has reached an extraordinary level, and it needs to stop," Santa Clara County Counsel Tony LoPresti told Reuters. "As civil prosecutors in Silicon Valley, we have a special duty to hold tech companies accountable to the law."
A Meta spokesperson said in a statement that the claim relies on reporting that "distorts our motives and ignores the full range of actions we take to combat scams every day. 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."
LoPresti said the county has brought in outside counsel — Bernstein, Litowitz, Berger and Grossmann; Renne Public Law Group; and Bishop Partnoy — on a contingency basis, meaning all three firms collect fees only in the event of a successful outcome. Day-to-day litigation decisions will remain exclusively with the county.
Santa Clara's lawsuit is the latest in a series of legal actions targeting Meta over scam advertising. The Consumer Federation of America filed a class-action complaint against Meta in the Superior Court of the District of Columbia, alleging the company misled users about its anti-scam efforts while charging higher-risk advertisers more — a practice that increased revenue while exposing users to fraud. That complaint alleged Meta internally projected that roughly 10% of its annual revenue, about $16 billion, would come from scam ads, illegal gambling, and sales of prohibited goods. Meta has said it intends to contest those claims as well, calling them a misrepresentation of the company's work.