Meta Sued for Profiting from Fraudulent Ads, Faces $7B Annual Claim

Lawsuit and Allegations

Meta faced a new legal challenge on May 11 when the Santa Clara County government in California filed a lawsuit alleging the company knowingly profited from billions of fraudulent advertisements on Facebook and Instagram, according to the county’s legal filing.

Tony LoPresti, the county attorney representing Santa Clara County, claimed that Meta generates approximately $7 billion in annual revenue from fraudulent ads. The lawsuit seeks court injunctions, civil penalties, and compensation for financial losses caused by Meta’s alleged conduct.

According to the complaint, Meta deceives elderly users and families through fraudulent advertisements while possessing the capability to track such ads. Rather than taking large-scale action against advertisers posting deceptive content, Meta allegedly tolerated violations and even implemented so-called “guardrails” designed to prevent anti-fraud measures that could reduce company revenue.

Types of Fraudulent Ads

LoPresti identified multiple categories of fraud appearing on Meta’s platforms, including “fake financial products, cryptocurrency scams, therapies claiming to cure incurable diseases, ineffective nutritional supplements, and fundraising impersonating celebrities,” according to the county’s allegations.

Meta’s Response

Meta’s spokesperson responded by stating the lawsuit relied on a Reuters report published in November of the previous year that “distorted the company’s motives and ignored the company’s complete daily anti-fraud actions.” The spokesperson noted that Reuters had reported Meta predicted approximately 10% of its 2024 total revenue ($16 billion) came from fraudulent and prohibited goods advertising, with the company displaying around 15 billion “high-risk” fraudulent ads daily to platform users on average.

Meta stated it deleted over 159 million fraudulent ads in 2025 and committed to defending against the lawsuit. “We actively combat fraud both on and off our platform because it benefits neither us nor the users and businesses that rely on our services,” the company’s spokesperson said.

Financial Impact and Stock Performance

On May 11, Meta’s stock price (Nasdaq: META) declined 1.77% to close at $598.86 per share, with a total market capitalization of $15.2 trillion. Year-to-date, the company’s stock had fallen nearly 8%, according to the report.

Meta’s revenue is predominantly derived from advertising. In 2025, the company’s total sales exceeded $200 billion. First quarter results showed Meta generated $563.11 billion in revenue, a 33% year-over-year increase. The company’s Family of Apps (FoA) segment earned $559.09 billion in Q1 revenue, up 33% year-over-year, with social media platform advertising revenue reaching $550.24 billion in the quarter.

Regulatory Context

Meta disclosed in its April financial report that it continues to monitor current legal and regulatory developments, including potential significant adverse effects from the European Union and United States on its business and financial performance. The company currently faces multiple allegations in the U.S. and EU concerning improper teenage use of social media. Meta stated these cases “may ultimately result in significant losses.”

FAQ

Q: How much revenue does Meta allegedly earn from fraudulent ads annually? A: According to Santa Clara County attorney Tony LoPresti, Meta earns approximately $7 billion per year from fraudulent advertisements on its platforms, as stated in the lawsuit filed on May 11.

Q: What types of fraud are mentioned in the lawsuit? A: The county’s allegations identify fake financial products, cryptocurrency scams, false medical treatments claiming to cure incurable diseases, ineffective nutritional supplements, and fundraising schemes impersonating celebrities, according to the legal complaint.

Q: What is Meta’s defense against these allegations? A: Meta’s spokesperson stated the lawsuit misrepresents the company’s motives and overlooks its daily anti-fraud efforts. The company reported deleting over 159 million fraudulent ads in 2025 and emphasized its commitment to combating fraud on and off its platforms.