California Sues Meta Over $7 Billion in Scam Ad Revenue

The suit was filed on behalf of all California residents and is the first of its kind in the state, and the first such action by any local civil prosecutor in the country. It accuses Meta of tolerating fraudulent advertising on a global scale, in violation of California's false advertising and unfair business practices laws.

County Counsel Tony LoPresti says Meta earns an estimated $7 billion a year from fraudulent or prohibited ads, and in some cases, allegedly charges scammers a higher price to run them. The complaint references a 2025 Reuters investigation that found Meta was using AI to create and test thousands of fake ad variations, then push them toward users who had previously clicked on similar scam content.

A May 2025 internal company presentation estimated that Meta was involved in one third of all successful internet scams in the U.S. The complaint also claims Meta's platforms caused over $2.5 billion in losses for Californians in 2024 alone.

The most serious claim in the lawsuit is that Meta knew about the fraud and allowed it to proceed. Meta's own systems flag ads that look like scams, but instead of pulling them, the company allegedly charges scammers more to keep them running. Internal documents cited in the complaint suggest Meta set up systems that would automatically slow down anti-scam efforts whenever those efforts risked cutting into ad revenue. The filing also claims Meta could adjust how many scam ads ran on its platforms to hit specific revenue targets.

As for who was being targeted, LoPresti says the ads promoted scams including fake financial products, crypto schemes, fake disease cures, ineffective supplements, and celebrity impersonations asking for money. Seniors and families were hit the hardest. The lawsuit also argues that Meta's AI tools helped target vulnerable users while driving up costs for legitimate small businesses competing in the same ad space.

The county is asking the court to force Meta to give up the revenue it made from scam ads, change how it runs its ad business, and pay back California residents who lost money through scams tied to Meta's platforms. Meta did not respond to a request for comment, though the company has previously denied that it deliberately accepts scam advertising to protect its revenue.

This is not Meta's first run-in with shady practices. The company was previously accused of stealing Snapchat users' data through a VPN app that Facebook marketed as a privacy tool.

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