Late last year, Reuters published a damning report about Mark Zuckerberg’s Meta — parent company of Facebook, Instagram, and WhatsApp — making around 10% of its annual earnings from ads they knew were scams. It was all based on internal Meta documents and each new detail revealed was more heinous than the last. The main crux was that Meta is actually pretty good at identifying scam ads on their platforms, but instead of banning them, Meta charges those scammers more to prey on their own users. Then most of that income — what Meta refers to as “violating revenue” and amounts to billions of dollars a year — is used to fund Meta’s ever-expanding AI operations. Which oh by the way, includes a division where Meta has been generating AI scam ads to fine-tune them to users who’ve clicked on other scam ads before. It’s like a circle jerk of greed, fraud, and malevolence. Except this week one local prosecutor said “J’accuse!” Santa Clara County, the heart of tech-haven Silicon Valley, just filed a lawsuit against Meta for “knowingly facilitating and profiting” from all the scam ad activity across their platforms. Finally!
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.
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.”
…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 throttle 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.
Did you catch that — Meta set up guardrails not against scam ads, but against Meta’s own teams from blocking scam ads. We’re in a f–ked up circle of hell that Dante could never imagine but Ebenezer Scrooge would love. However, I think we have cause to be very cautiously optimistic. Meta was dealt a huge blow earlier this year when they were found guilty in two landmark cases. Those lawsuits held Meta responsible for knowing their platforms were detrimentally addictive and sexually exploitative for young people, and not doing anything to stop it (because: money). Those cases relate to this new lawsuit because the juries didn’t let Meta hide behind Section 230, the infamous Communications Decency Act clause that shields companies from liability for third-party content. The tech giants have long been screaming “But Section 230!” in court, but these recent cases successfully articulated the difference between third-party content, and Meta’s own machinations to push that content on its most susceptible users in order to enrich themselves. May a new Santa Clara jury come to the same logical conclusion and hold Meta to account.
I didn’t know May was National Sue Meta month, but I like it!
Note by CB: I logged in to my finsta Facebook and almost immediately got this AI ad for a dog brush.
Photos via Instagram and Facebook and credit: Getty