Santa Clara County Sues Meta Over Alleged Scam Ads and Fraudulent Advertising Practices

Legal pressure is building on major tech platforms over how online ads are policed, especially when it comes to scams. In a new development from California, Santa Clara County has taken legal action against Meta Platforms, accusing it of allowing fraudulent advertising to spread across its social media apps.

 

TL;DR

 

• Santa Clara County has sued Meta, accusing it of allowing scam ads on Facebook and Instagram.
• The lawsuit claims Meta may have earned billions from fraudulent “high-risk” ads while failing to stop them.
• Meta denies the allegations and says it actively fights scams on its platforms.

The lawsuit, filed Monday in Santa Clara County Superior Court on behalf of all California residents, claims Meta has benefited from scam-related ads while failing to stop them effectively. It alleges violations of California’s false advertising and unfair business practices laws.

According to the complaint, Meta tolerated fraudulent advertising on a global scale and is seeking restitution, civil damages, and a court order to stop what it calls unfair business practices. The county also cites leaked internal documents first reported by Reuters last year, claiming the company may have earned as much as $7 billion annually from so-called “high-risk” scam ads that showed clear signs of fraud.

Rather than aggressively removing such advertisers, the suit alleges Meta allowed much of the activity to continue and even created “guardrails” that could limit scam prevention efforts if they affected revenue.

Meta has rejected the claims. “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.“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.”

The filing goes further, arguing that Meta contributed to a wider ecosystem of fraud by allowing intermediaries to sell accounts used for ads that were shielded from enforcement. It also claims scam ads were targeted at users who had previously engaged with similar content.
 
County Counsel Tony LoPresti argues that Meta’s public claims about fighting scams may have misled users about the extent of the problem. It suggests the company overstated its enforcement efforts while benefiting financially from the same ads it said it was trying to stop. The filing even alleges that “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.”

Santa Clara County is working with three outside law firms on the case but will retain full control over legal decisions, with the firms paid only if the county succeeds. Meta, meanwhile, has said it intends to defend itself against the allegations.