Santa Clara County Sues Meta Over Alleged Scam Ads
California’s Santa Clara County has sued Meta Platforms, alleging the company profited from scam advertisements on Facebook and Instagram in violation of the state’s false advertising and unfair business practices laws.
The lawsuit, filed on Monday in Santa Clara County Superior Court on behalf of all California residents, accuses the social media company of knowingly tolerating fraudulent advertising across its platforms. The county is seeking restitution, civil damages, and a court order barring Meta from continuing the alleged practices.
Lawsuit Targets Alleged Scam Ad Revenue
According to the complaint, Meta generated billions of dollars from so-called “high-risk” advertisements that displayed clear signs of fraud. The filing cites leaked internal documents first reported by Reuters last year, which allegedly showed the company earned as much as $7 billion annually from scam-related advertising activity.
The county claims that instead of aggressively removing fraudulent advertisers, Meta allowed the activity to continue because it remained profitable. Furthermore, the lawsuit alleges the company created internal “guardrails” designed to limit anti-scam enforcement measures if they threatened advertising revenue.
Claims of Broader Fraud Facilitation
Santa Clara County also alleges Meta contributed to a wider fraud epidemic by permitting intermediaries to sell advertising accounts that were shielded from enforcement actions. In addition, the complaint claims the company targeted scam advertisements at users who had previously interacted with similar misleading promotions.
The filing further references Reuters’ testing of Meta’s generative artificial intelligence tools. According to the county, these systems often helped unethical marketers create deceptive advertisements more efficiently.
County Counsel Tony LoPresti told Reuters that the scale of the alleged misconduct demanded legal action.
“The scale of Meta’s misconduct has reached an extraordinary level, and it needs to stop,” LoPresti said. He added that civil prosecutors in Silicon Valley have a responsibility to hold technology companies accountable under the law.
Meta Rejects Allegations
Meta did not immediately respond to requests for comment regarding the lawsuit. However, the company has previously denied accusations that it knowingly accepts scam advertisements to protect its revenue stream.
Last year, a Meta spokesperson told Reuters that the company actively fights fraudulent content because users, legitimate advertisers, and the platform itself do not want scams appearing on Facebook and Instagram.
Santa Clara County’s complaint argues that such public reassurances formed part of Meta’s alleged misconduct. The filing claims Meta misled users by portraying anti-scam enforcement as a top priority while concealing the extent to which fraudulent advertisements allegedly contributed to company profits.
The lawsuit also alleges Meta can adjust the volume of scam advertisements permitted on its platforms to help manage earnings performance or achieve revenue targets.
Outside Firms Assisting County
To pursue the case, Santa Clara County Counsel is working alongside three outside law firms: Bernstein Litowitz Berger & Grossmann, Renne Public Law Group, and Bishop Partnoy.
LoPresti said the county will retain full control over litigation decisions. He also noted the firms would only receive payment if the county prevails in court.
With inputs from Reuters