California county sues Meta, alleging it profited from scam ads

A California county filed a lawsuit against Meta Platforms Inc., alleging that the company has been using its social media platforms Facebook and Instagram to promote and profit from scams in violation of California's business laws.

The lawsuit, which was filed on May 12 in the Superior Court of Santa Clara County on behalf of all Californians, alleges that Meta "actively" participated in targeting scam advertisements to residents of California and on its global market, ultimately in violation of the state's false advertising and unfair competition laws.

The suit is asking the court to require Meta to abide by California's advertising laws, pay civil penalties for "each act of false and misleading advertising" and unlawful act, and pay restitution.

"This case is about accountability. It's about ensuring that as behemoth tech companies open up new frontiers in our society, that they aren't lawless frontiers," Santa Clara County Counsel Tony LoPresti said during a press conference. "Meta might be a massive power broker in Silicon Valley and throughout the world, but Meta is not a company above the law."

Meta responded to the lawsuit by noting that the county's complaint "relies on Reuters reporting that distorts our motives and ignores the full range of actions we take to combat scams every day."

Santa Clara County's complaint heavily cites a 2025 Reuters investigation that found internal Meta documents detailing how the company earned about $7 billion from showing users scam advertisements.

"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," Meta said in a statement about the lawsuit. "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."

The lawsuit claims that Meta used its social media platforms to expose more than 3.5 billion daily active users to over "15 billion scam ads a day,” and that "Meta was involved in one third of all successful Internet scams in the U.S."

In its investigation, Reuters found that Meta had actively "divested itself from anti-scam efforts," while it still "continued to rake in profits from scam advertisers," according to the lawsuit. Additionally, the complaint cites Meta's 2023 decision to lay off "entire anti-scam teams" and roll back "scam-prevention efforts" as a significant piece of evidence.

"We know that Meta loves to tout its fraud prevention efforts," LoPresti said. "But the allegations in the complaint tell a very different story. What Meta won't tell you is that in 2025, it prohibited its own fraud-prevention teams from taking any action that would cost Meta 0.15 percent of the company's total revenue."

The lawsuit claims that Meta treated the potential penalties from regulators as "a cost of doing business," and labeled the $7 billion in annual revenue from scam ads into a category it calls “violating revenue.”

"In 2024, when Meta 'anticipate[d] penalties of up to $1 billion,' it concluded that 'those fines would be much smaller than Meta’s revenue from scam ads,'" the lawsuit reads.

LoPresti noted that although Meta's internal warning systems may flag advertisements that are "highly likely to be fraudulent," he claims that Meta allows these flagged ads to be posted on its websites, if advertisers pay a "premium price."

"Meta has established a system for monetizing and profiting from fraud," LoPresti said during the press conference. "And it's clear that Meta is taking careful steps to ensure that its revenue from scam ads continues to flow."

"We can't allow a company as influential as Meta to continue perpetrating a scheme of this magnitude to deceive and victimize consumers," LoPresti said.

Noe Padilla is a Northern California Reporter for USA Today. Contact him at [email protected], follow him on X @1NoePadilla or on Bluesky @noepadilla.bsky.social. Sign up for the TODAY Californian newsletter or follow us on Facebook at TODAY Californian.