Santa Clara County has initiated legal action against Meta Platforms, accusing the social media company of benefiting from advertisements that promoted scams and thereby violating California's false advertising and unfair business practices laws.
The complaint was filed Monday in Santa Clara County Superior Court and purports to represent all residents of California. In its papers the county contends that Meta tolerated fraudulent advertising on its Facebook and Instagram services on a global scale and that the company monetized that activity.
Among the remedies sought by the county are restitution for affected consumers, civil damages and a judicial injunction that would bar Meta from continuing what the filing characterizes as unfair business practices.
Citing internal materials described in the complaint, the county asserts that the company derived as much as $7 billion in annual revenue from a category of ads the filing labels "high-risk" - advertisements that, the county says, bore clear indications of fraud.
Rather than carrying out a widespread crackdown on deceptive advertisers, the county alleges Meta in many cases tolerated the misconduct. The filing also claims the company set up what it calls "guardrails" to prevent or limit efforts to reduce scam advertising where doing so would have an adverse effect on revenue.
The complaint further alleges that Meta materially contributed to what the county describes as an epidemic of fraud by allowing intermediaries to sell accounts that were shielded from enforcement and by directing scam ads at users who had previously clicked on similar deceptive offers.
In addition, the county points to testing and internal findings referenced in the complaint that, it says, show Meta's generative artificial intelligence tools frequently assist unscrupulous marketers in creating scam advertisements.
"The scale of Meta's misconduct has reached an extraordinary level, and it needs to stop," County Counsel Tony LoPresti said, describing the gravity of the allegations and the county's rationale for bringing the case.
Meta did not immediately provide a response to a request for comment on the filing. The company has previously rejected assertions that it knowingly accepts scam advertising to preserve revenue, and has said it fights fraud and scams because users and legitimate advertisers do not want such content.
Santa Clara County's complaint highlights those public reassurances as part of its legal theory, arguing that by representing anti-scam efforts as a top priority and asserting rigorous ad review processes, Meta misled the public about the true extent to which deceptive advertising contributed to its profits.
The county's filing also includes an assertion, made "on information and belief," that Meta can modulate the volume of scam ads permitted on its platforms to smooth earnings or meet particular revenue targets.
To prosecute the case, the county counsel's office has enlisted three outside law firms - Bernstein, Litowitz, Berger and Grossmann; Renne Public Law Group; and Bishop Partnoy. County Counsel LoPresti said the county will retain ultimate control over litigation decisions and that the outside firms are to be paid only if the county prevails.
Legal and market context
The lawsuit frames its allegations within California's consumer protection framework and seeks remedies that would include making consumers whole, compensating for civil harms and obtaining court-ordered limits on future business conduct. The complaint rests on internal documents and testing cited by the county and ties alleged practices to the company's revenue performance.
Procedural posture
The case has been filed in state superior court and, as of the filing, seeks statewide relief on behalf of California residents. The county is leading the prosecution with outside counsel under contingency arrangements subject to county control.
What the complaint alleges
- Meta earned up to $7 billion annually from "high-risk" scam ads, according to internal documents cited in the filing.
- The county alleges Meta tolerated and in some cases impeded efforts to reduce scam advertising when enforcement would reduce revenue.
- The complaint claims Meta's systems and intermediaries enabled the placement and persistence of deceptive ads, and that the company targeted users susceptible to such scams.