Rhode Island sues Meta over alleged tolerance for scam advertising

By Jeff Horwitz and Katie Paul

Oct 22 (Reuters) - Rhode Island sued Meta Platforms META.O in state court on Thursday over the company's alleged tolerance for widespread scam advertising on its Facebook, Instagram and WhatsApp platforms.

The suit, filed by Rhode Island Attorney General Peter Neronha in Providence Superior Court, accuses Meta of unlawfully profiting from and participating in the creation of billions of dollars in scam advertising – even as it assured its billions of users that it was working diligently to protect them.

It is the first such scams-related case to be brought against Meta by a US state, following a similar lawsuit filed in May by California's Santa Clara County.

The lawsuit seeks monetary civil penalties for each of Meta's alleged violations of Rhode Island state law, restitution to consumers, disgorgement of ill-gotten gains and a judicial order requiring the company to address, rather than profit from, scam ads it develops and delivers on its platforms.

"As alleged, Meta knowingly exposed vulnerable users to fraud and scams, and made enormous profits in doing so. When companies, big or small, take advantage of Rhode Island consumers, this office will do everything within our authority to hold them to account," Neronha said in a press release.

The suit cites Reuters reporting from last year on internal Meta documents outlining the vast scale of fraudulent advertising on the company's platforms – and Meta's calculations that it was earning far more from high-risk scam ads than it expected to pay in fines for allowing them.

According to those documents, Meta displays around 15 billion "higher risk" scam ads to users every day, and earned roughly 10% of its 2024 revenue from fraudulent e-commerce, dubious health products and other banned marketing.

In many cases, Rhode Island's suit alleged, Meta's AI ad creation tools actively assisted scammers with their fraudulent marketing. Rather than consistently blocking advertisers that its automated detection systems suspected of fraud, Rhode Island alleged, Meta sometimes charged them extra as a penalty.

"Meta knowingly helped create and optimize these ads to ensure that they were as effective as possible and then lied about them, misrepresenting to the public its commitment to prevent fraud on its platforms," the suit stated.

Meta has disputed the Reuters reporting.

"We aggressively fight fraud and scams because people on our platforms don't want this content, legitimate advertisers don't want it and we don't want it either," Meta spokesman Andy Stone said in response to the reporting last year, calling it "a selective view that distorts Meta's approach to fraud and scams."

In the months since Reuters published the stories, Meta has claimed progress on anti-scam initiatives. But Rhode Island alleged that scams remain rampant and readily findable in the company's ad library, a database of ads run on Meta's platforms.

"The ad below, for example, promised to reverse Alzheimer's in 45 days," Rhode Island's complaint stated of one set of scam ads. "There were more than 2,000 versions of this ad active in the Meta Ad library."

TARGETING THE ELDERLY

Often the fraudulent ads targeted elderly people, Rhode Island alleged, citing an investigation by the nonprofit Center for Countering Digital Hate, which identified nearly 94,000 scam ads on Meta's platforms.

"Some of these advertisers spent more on Meta ads over a several year period than large brands like Walmart or Pfizer," the lawsuit stated.

Beyond scams, the Rhode Island attorney general's office said it found that Meta was similarly failing to police other types of illicit ads, such as for AI apps for deepfake pornography. In one example provided by the state, an ad featured side-by-side images of a fully clothed woman in a coffee shop next to an image of her engaged in a sex act.

Rhode Island also cited examples of scam ads impersonating public figures and trusted institutions like banks to leverage their credibility, including a case in which scammers in China used the name and image of a senior Bank of America executive in ads on Facebook and Instagram that lured users into scam stock trades on WhatsApp.

Public survey data cited by Rhode Island – and Meta's own internal appraisals obtained by Reuters – indicate that the company's platforms are responsible for a disproportionate share of online scams and that Meta's scam defenses were weaker than those of its main digital advertising competitors.

"It is easier to advertise scams on Meta platforms than Google," concluded an internal Meta review in April 2025.

Meta nonetheless sought to defeat regulatory efforts to require verification, Rhode Island said.

The lawsuit stated that "a banned advertiser can reappear in the time it takes to provide a new email address or phone number."