Santa Clara County sues Meta in California alleging tech giant profited from Facebook, Instagram scam ads
Meta is being sued by a California prosecutor alleging that the tech giants is knowingly facilitating and profiting billions of dollars from scam ads on its social media platforms.
The lawsuit, filed on Monday by Santa Clara County Counsel Tony LoPresti, alleges that Meta tracks some 15 billion fraudulent ads across its Facebook, Instagram, and WhatsApp platforms. The company allegedly derives some $7 billion in annual "violating revenue," which is Meta's internal term for revenue from fraudulent ads, the county said in a press statement.
The lawsuit is the first-of-its-kind by a local prosecutor against Meta. Historically, most lawsuits against tech companies by local prosecutors are in partnership with state attorneys general.
According to the complaint, Meta's own systems flag ads that are likely scams, but instead of prohibiting them, the company instead charges scammers a higher price to run them. The lawsuit also alleges that the company's artificial intelligence tools allow it to target vulnerable consumers, defrauding seniors and families, and driving up costs for legitimate small businesses by flooding its ad auctions with fraudulent ads.
Meta complaint Santa Clara County scam ads (PDF 1.02 MB )
The lawsuit cited a 2025 Reuters investigation that found Meta was using AI to generate and test thousands of deceptive ad variations, and steer them toward users who previously clicked on scam ads. The investigation found that even when advertisers are caught running scam ads, the advertisers could accrue multiple violations before Meta would block them.
"Meta's platforms have become a preferred hunting ground for scammers, and our lawsuit alleges that Meta not only knows it, but has put in place systems and tools to ensure it profits from it," said LoPresti in a prepared statement. "No corporation is above the law. As civil prosecutors in Silicon Valley, we cannot allow a tech company as powerful as Meta to continue perpetrating a worldwide scheme to deceive consumers."
A Meta spokesperson said the claim relies on a report "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," the spokesperson added. "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."
Last month, the advocacy group Consumer Federation of America filed a similar complaint, alleging Meta failed to block scam ads while charging those advertisers more to display their content. Both complaints cited internal documents that allegedly show that Meta established guardrails that automatically thottle back internal efforts to reduce scams if the efforts were projected to cost too much in advertising revenue.
The Santa Clara County complaint claims Meta's platforms host a third of all U.S. internet scams and caused over $2.5 billion in losses for Californians in 2024 alone. The lawsuit seeks financial penalties intended to strip Meta of its revenue generated by alleged scam ads along with court-ordered changes to its business practices. It also seeks restitution to California residents who lost money to scams facilitated by Meta's algorithms.
In March, a jury found Meta and Google liable for intentionally creating products that led to harmful and addictive behavior by young users. The landmark decision could set a legal precedent for similar allegations brought against social media companies, which have long taken legal refuge behind the Section 230 clause of the 1996 Communications Decency Act. The clause protects internet companies from liability for third-party content posted on their platforms, but in the both the March case and in the Santa Clara County case filed Monday, prosecutors have targeted the apps' design and their algorithms, not the content itself.