Meta accused of making $7 billion a year from scam ads on Facebook and Instagram

Santa Clara County in California has sued Meta, alleging the company earns roughly $7 billion a year by monetizing scam ads on Facebook and Instagram. The lawsuit, filed by County Counsel Tony LoPresti, claims Meta built and maintained what it describes as a "massive ecosystem of fraudulent advertising" — charging scammers premium rates rather than removing their ads. Californians over 60 lost more than $800 million to such scams in 2024 alone.

The claim

The case leans heavily on internal Meta documents, first surfaced by a Reuters investigation, which reportedly show the company was involved in roughly one-third of all successful internet scams in the US. One internal presentation projected $16 billion in fraud-related revenue for 2024. According to KQED, Meta's own guardrails limited anti-fraud efforts to situations where they would affect no more than 0.15% of the company's revenue — meaning financial exposure, not user safety, set the ceiling.

CBS SF reports the complaint also documents how fraudsters used AI-generated content and "cloaking" techniques to evade Meta's detection systems — and that Meta charged those advertisers a premium for placements it had already flagged as high-risk.

Santa Clara says this is the first civil prosecution of its kind brought by a local prosecutor in the United States. LoPresti said at a press conference that tech companies "should not be able to ignore fraud in exchange for ad revenue."

A widening net

Santa Clara is not alone. The Consumer Federation of America filed a parallel suit in Washington D.C., and both Washington State and the US Virgin Islands have filed related actions — all citing the same leaked internal documents. Users in the US are exposed to an estimated 15 billion scam ads per day across Meta's platforms, per the county's filing.

Meta pushed back, saying it "strongly disagrees" with the lawsuit and intends to fight it in court. The company says it removed more than $159 million worth of fraudulent ads last year and has cooperated with law enforcement while rolling out new user-protection tools.

The internal documents, however, may complicate Meta's usual Section 230 defense — which shields platforms from liability for third-party content. Showing the company knowingly profited from fraud could significantly narrow that immunity. The lawsuit seeks an injunction, restitution for victims, and civil penalties.

A separate report from the Center for Countering Digital Hate found Meta may have earned over $14 million from Medicare-related scam ads on Facebook alone — adding another data point to an increasingly difficult picture for the company to defend.