Meta is pushing a US federal court to shut down a lawsuit brought forward by Facebook users who claim they lost money through scam ads.
Meta is pushing for a federal court to throw out a lawsuit, which alleges that scam ads on Facebook led users to lose money.
The complaint, filed with the 9th Circuit Court of Appeals, claimed that Facebook “aggressively” solicits ad sales in China.
An internal study allegedly illustrated almost 30% of ads placed by China-based advertisers were in violation of Facebook policies, MediaPost reported.
The social media giant has insisted it would “take appropriate action” if it became aware of any harmful content on its platforms and remove any material that “purposefully deceives”, defrauds or exploits others for money of property.
However, under Meta’s current terms of services, it states the company “may” take action regarding harmful content.
Meta has responded to the suit, saying its terms of service “do not promise that Meta will accomplish the impossible task of preventing a user from ever being exposed to misleading content”.
The plaintiffs in the claim disagree claiming social media giant is obligated to handle harmful content appropriately.
Last year, the US District Court judge Jeffrey While in the Northern District of California, said in his ruling, that if the allegations are proven true, it could support claims Meta violated its user contracts and went against its duty of good faith.
Meta is using the appeals court to challenge the ruling.
The tech giant cited Section 230 of the Communications Decency Act, which has often been used to shield platforms from liability for content uploaded by third-parties, including advertisers, as platforms claim neutral intermediary status.
However, the 9th Circuit ruled that Section 230 was not an applicable defence against these allegations in 2024, as Meta broke its own contract with users by violating its terms of service. That being said, the court was not clear at the time whether the terms of service was an enforceable contract.
Nations pushing back
This is the latest case against Meta over scam ads or harmful content on its platforms.
Most recently, a German court ruled Meta is liable for fake ads posted by third-parties on Instagram and Facebook.
Earlier this year, the Thai regulator sued Meta over scam ads posted on its platforms. The Consumer Council said the ads fuelled the spread of misleading and illegal investment scams, gambling promotions and fake profiles of public figures.
Following on from this, Cambodia’s Prime Minister told a global cyberfraud conference the country would not be a safe haven for scam syndicates.
The country is clamping down on online scams, with authorities saying they have eradicated industrial-scale scam compounds, with the PM saying that Cambodia “will not allow criminal syndicates to undermine our country’s progress and the livelihood of over 17 million Cambodian people.”
Estimates show that Americans lost over $10bn to scammers from the region in 2024, Reuters reported, prompting pressure to address both the scams and the platforms hosting them.
In another case, NordVPN’s Threat Intelligence team discovered a large-scale criminal network impersonating over 400 well-known brands – including Kalshi, Disney+ and Duolingo – to trick users into visiting unlicensed online gambling sites through paid social media ads on Instagram and Facebook.
In the Netherlands, research from the Responsible Affiliates Quality Mark (KVA) and Licensed Dutch Online Gambling Providers (VNLOK) found Meta generated more the €10m per year from unlicensed brands advertising on its platforms. It estimated there were around 15,114 illegal gambling ads in March this year on Instagram and Facebook.
