New legal complaint targets Facebook over alleged scam profits

Santa Clara vs Meta showdown

Santa Clara County Counsel Tony LoPresti filed a civil prosecution against Meta Platforms, Inc. in Santa Clara County Superior Court on May 11, 2026. The case is listed as People of the State of California v. Meta, and it alleges Meta knowingly facilitates and profits from scam ads on Facebook and Instagram.

The complaint says Meta tracks up to 15 billion scam ads shown to users each day and derives an estimated $7 billion a year in “violating revenue,” an internal term for revenue from fraudulent or otherwise prohibited ads. Meta denies deliberately accepting scam ads to protect revenue and says it aggressively fights scams.

What the lawsuit says

The People of the State of California v. Meta alleges that Meta personnel estimated the company’s platforms were involved in approximately one-third of all successful consumer scams in the United States. That figure is an allegation based on internal documents cited in the complaint and Reuters reporting, not a finding by a court.

The lawsuit says Meta’s ad practices go beyond a few bad actors slipping through review. County Counsel Tony LoPresti said Meta’s platforms had become a “preferred hunting ground for scammers,” and the complaint argues the company profited from deception rather than doing enough to stop it.

Not ignoring but helping

The lawsuit goes beyond saying Meta merely looked the other way and alleges that its advertising tools helped create, refine, and target deceptive ads. The case is People of the State of California v. Meta, and the complaint portrays the company as an active participant in the ad system that enabled scams.

Meta’s Advantage+ feature used AI to suggest alternate versions of a test ad, and Mark Zuckerberg said Meta’s creative tools could produce about 4,000 versions of an ad for testing. The complaint relies on that kind of ad-generation and optimization technology to argue that scam advertisers could use Meta’s tools to make deceptive ads more effective.

The penalty bid trick

The lawsuit and Reuters reporting describe a “penalty bid” system in which Meta’s systems could flag advertisers as likely scammers without immediately removing them. Under that approach, advertisers below Meta’s removal threshold could be charged higher ad rates instead of being blocked outright.

Meta has said the documents present a selective view and that it aggressively fights scams because scams are bad for users, advertisers, and Meta’s own business.

Little-known fact: Meta only bans advertisers when its systems are 95% certain of fraud. This is a much higher standard than most regulators require for consumer protection enforcement. Suspicious advertisers below that threshold get to stay.

Targeting your family members

The complaint says Meta’s ad-personalization systems can steer scam ads toward users who previously clicked on similar scam ads. Reuters reported that users who click on scam ads are likely to see more of them because Meta’s ad system tries to deliver ads based on user interests.

That allegation raises concern about vulnerable users being repeatedly exposed to deceptive ads after engaging with similar content. The lawsuit frames this targeting as a central part of the alleged harm, especially for people most likely to be deceived.

Firing the scam police

Reuters reported that layoffs affected Meta’s enforcement capacity, including a 2023 planning document saying everyone on a team handling advertiser concerns about brand-rights issues had been laid off. Separately, Reuters reported that Meta created a China-focused anti-fraud team that reduced problematic ads from 19% to 9% of China advertising revenue in the second half of 2024.

Reuters later reported that the China ad-enforcement team was asked to pause its work and was disbanded after an internal strategy pivot. By mid-2025, banned ads had climbed back to about 16% of Meta’s China revenue, while Meta said the special team had always been temporary and that its global anti-scam work continued.

The fine was cheaper

The county found internal Meta documents that show the company did the math on this. In 2024, Meta reportedly thought it might get fines of up to $1 billion for letting scams run wild on its platforms.

But they looked at the $7 billion they were making from scam ads and made a choice. The lawsuit says Meta concluded those penalties would be “much smaller” than the revenue from scams. So they kept the money flowing rather than stopping the fraud.

Little-known fact:  In the first half of 2025, Meta told its ad-integrity teams not to take any action that would cost the company more than 0.15% of projected revenue.

15 billion ads per day

To really understand the scale, just look at the numbers in the legal filing. The lawsuit claims Meta shows over 15 billion scam advertisements every single day across its apps. That is billions of chances for someone to lose their savings.

When you add in non-paid scams like posts and marketplace listings, the number jumps even higher. The county argues that Meta has turned its platforms into a giant vending machine for fraud, with scammers as the paying customers.

Promises vs real actions

Meta often says they aggressively fight scams and makes safety a top priority. The lawsuit says these public statements are actually part of the illegal behavior they are suing over. By bragging about safety, Meta tricks people into letting their guard down.

The county claims this is false advertising under California law. Behind the scenes, they say Meta is protecting the scam revenue stream instead. You might see a safety message in your feed, but the algorithms keep serving up shady ads.

What Meta says back

Of course, Meta isn’t just taking this quietly. A company spokesperson said the lawsuit twists their motives and ignores all the work they do to fight scams every single day. They argue that scammers are bad for business in the long run.

Meta pointed out that they removed over 159 million scam ads in 2025 alone. They say they partner with law enforcement around the world and will fight this case in court. The company denies that it deliberately accepts scam ads to protect revenue.

What the county wants

The county isn’t just asking for a small fine or a slap on the wrist. They want the court to force Meta to completely change how it handles advertising. They are seeking restitution for Californians who lost money, plus civil penalties for each fake ad.

If the judge agrees with the county, this could cost Meta many billions of dollars. The lawsuit also wants an order prohibiting Meta from engaging in these practices ever again. They aim to strip the profit right out of the scam ad business.

Meta’s legal headaches don’t stop with scam ads. Check out the Court rules as Meta must face the Massachusetts youth addiction lawsuit.

Why this matters for you

This lawsuit could change how social media companies treat scam ads forever. If the county wins, other states and counties might file similar cases. Meta might be forced to build much stronger protections, or risk huge financial penalties.

For now, the best advice is to be extra careful with ads you see on Facebook and Instagram. If something sounds too good to be true, it probably is. Scammers are getting smarter every day, but now the people who run the platforms might finally face real consequences.

Meta is facing pressure on more than one front right now. Check out the Meta job cuts spread across multiple divisions during restructuring.

Think a friend or family member has seen one of those too-good-to-be-true ads on Facebook? Hit the like button if you want safer platforms, and share your own scam-ad story in the comments below.

This slideshow was made with AI assistance and human editing.

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