Meta Faces Consumer Federation of America Lawsuit Alleging Profited from 10% Scam Ads on Facebook and Instagram

The Consumer Federation of America filed a lawsuit Tuesday in the District of Columbia Superior Court against Meta, alleging the company profited from scam advertisements on Facebook and Instagram. According to the complaint, Meta misled users about its efforts to combat fraud while generating more than 10% of its revenue from high-risk ads, violating the District’s Consumer Protection Procedures Act.

The lawsuit, filed Tuesday in the District of Columbia Superior Court, contends that Meta violated the District’s Consumer Protection Procedures Act by allowing scam advertisements to proliferate on Facebook and Instagram while profiting from them. The Consumer Federation of America (CFA), a nonprofit advocacy group based in Washington, D.C., brought the suit on behalf of consumers harmed by the alleged deceptive practices. According to the complaint, Meta misled users about its efforts to combat fraud, downplaying the scale of scams and creating a false impression of safety on its platforms.

Internal documents cited in the lawsuit reveal that Meta anticipated generating more than 10% of its revenue in 2024 from high-risk ads, including scam advertisements, illegal gambling, and prohibited goods.

The CFA states that this amounts to approximately $16 billion in profits for the year, a figure that matches the reported losses Americans faced due to online scams in 2024. The complaint asserts that Meta charges higher rates to advertisers deemed higher risk rather than banning them outright, effectively prioritizing revenue over user safety.

The CFA alleges that Meta’s policies allow scam ads to persist despite numerous user reports and that the company routinely ignores these complaints. The lawsuit points to Meta’s practice of permitting up to 32 automated strikes for fraudulent activity before banning an advertiser, a threshold CFA says enables the continued spread of scams. According to the complaint, Meta’s terms of service and community standards exaggerate the company’s protective measures, promising “appropriate action” and removal of deceptive content that the CFA claims are not fulfilled in practice.

In response, Meta issued a statement calling the allegations a misrepresentation of its work and said it would vigorously defend itself in court. The company highlighted that it removed more than 159 million scam ads last year, with 92% taken down before any user reports. Meta also noted it disabled 10.9 million accounts linked to criminal scam operations on Facebook and Instagram. A spokesperson told AARP and CBS News that fighting scams is “bad for business” and that Meta aggressively combats fraudulent activity to protect people and businesses.

Ben Winters, director of AI and data privacy at the CFA, said in a statement that Meta prioritizes profit over user safety and knowingly inflates its bottom line at the expense of consumers. The CFA is seeking to recover the profits it alleges are “illegal” under the D.C. Consumer Protection Procedures Act on behalf of those harmed by scam ads on Meta’s platforms.

The lawsuit comes amid ongoing scrutiny of Meta’s handling of scam advertisements. A 2025 Wall Street Journal report revealed that employees had warned company leadership about the prevalence of scams but that revenue concerns prevented stronger enforcement actions. Additionally, a prior lawsuit against Meta was revived by the 9th U.S. Circuit Court of Appeals, which ruled that Section 230 immunity does not shield the company from claims related to breaches of its terms of service. That case, initially dismissed by a trial judge, was sent back for trial, signaling continued legal challenges over Meta’s responsibility for content on its platforms.

The CFA’s complaint echoes concerns raised by other watchdog groups and media investigations regarding the persistence of scam ads on social media. YouTube reporting confirmed that the CFA filed the complaint alleging Meta knowingly allowed scam advertisements to remain active to maintain revenue streams. The outcome of this latest lawsuit could have significant implications for how social media companies regulate advertising content and address consumer protection laws in the District of Columbia and beyond.