Santa Clara County sues Meta over alleged $7 billion scam ad revenue

Santa Clara County has initiated legal proceedings against Meta Platforms in the Santa Clara County Superior Court, accusing the technology giant of profiting from fraudulent advertisements on Facebook and Instagram. The lawsuit, filed on behalf of all California residents, asserts that Meta violated state laws regarding false advertising and unfair business practices by tolerating global fraudulent activity across its platforms.

The complaint, which cites leaked internal documents, alleges that Meta generated up to $7 billion annually from what the county describes as "high-risk" scam ads. According to the filing, the company established internal guardrails specifically designed to obstruct scam reduction initiatives if they were deemed too costly for the business. This approach allegedly allowed the platform to prioritise financial targets over user safety and regulatory compliance.

Further allegations within the suit claim that Meta materially contributed to an epidemic of fraud by enabling middlemen to sell accounts protected against enforcement actions. The county also asserts that the social media giant targeted scam advertisements at users who had previously engaged with similar bogus offerings. Additionally, the complaint states that Meta's generative artificial intelligence systems were frequently utilised to assist unethical marketers in creating these deceptive advertisements.

County Counsel Tony LoPresti, who is leading the prosecution, described the scale of the alleged misconduct as extraordinary. He emphasised the special duty of Silicon Valley civil prosecutors to hold technology companies accountable to the law. The filing suggests that Meta deceived the public by publicly assuring users that anti-scam efforts were a top priority while allegedly manipulating the volume of scam ads to smooth earnings or meet specific revenue goals.

Meta has previously rejected claims that it deliberately accepts advertising for scams to maintain its revenue stream. A company spokesman stated last year that the firm aggressively fights fraud because users, legitimate advertisers, and the company itself do not want such content. However, the Santa Clara complaint uses these past reassurances as evidence of alleged misconduct, arguing they were employed to conceal the extent to which bogus ads boosted profits.

To assist in the litigation, the county is working with three outside law firms: Bernstein Litowitz Berger and Grossmann, Renne Public Law Group, and Bishop Partnoy. County Counsel LoPresti confirmed that the county retains full control over all decisions regarding the case, with the external firms only eligible for payment if the county achieves a victory. The suit seeks restitution, civil damages, and a court order prohibiting Meta from engaging in these unfair practices.