- Rhode Island filed a first-of-its-kind lawsuit against Meta, accusing the company of knowingly allowing widespread fraudulent advertising on Facebook, Instagram and WhatsApp while earning billions from the scheme and misleading users about its anti-fraud efforts.
- Meta is alleged to have actively assisted scammers through its AI ad creation tools, failed to block fraudulent advertisers and sometimes charged them extra as a penalty instead of banning them, with roughly 10% of Meta's 2024 revenue coming from such ads.
- Scam ads disproportionately targeted elderly users, with examples including ads claiming to "reverse Alzheimer's in 45 days," impersonating public figures and banks and Meta's own internal review admitting it was "easier to advertise scams on Meta platforms than Google."
- The lawsuit seeks monetary penalties, consumer restitution and a court order requiring Meta to stop profiting from scam ads and to address the problem, following Meta's recent $18 billion multistate settlement over child addiction claims and a $25 billion New Mexico privacy judgment.
- Meta disputes the lawsuit as "unfounded," pointing to its removal of over 159 million scam ads, new anti-fraud tools and partnerships with law enforcement, while Rhode Island argues that scams remain rampant and readily findable on the platforms.
Rhode Island filed a lawsuit Thursday against Meta Platforms, accusing the company of knowingly allowing widespread fraudulent advertising on its Facebook, Instagram and WhatsApp platforms while earning billions of dollars from the scheme and misleading users about its efforts to stop it. The suit, the first of its kind brought by a U.S. state specifically targeting Meta's alleged tolerance of scam ads, seeks monetary penalties, consumer restitution and a court order requiring the tech giant to address the problem rather than profit from it.
The complaint, filed by Rhode Island Attorney General Peter Neronha in Providence Superior Court, alleges that Meta "unlawfully profited from and participated 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. The case follows a similar lawsuit filed in May by California's Santa Clara County and comes amid a growing wave of legal and regulatory scrutiny over Meta's business practices, including a recent $25 billion judgment in New Mexico over data privacy and a multistate settlement over claims that Meta designed its platforms to addict children.
State alleges Meta's AI tools helped scammers create fraudulent ads
Rhode Island's lawsuit alleges that Meta's automated systems not only failed to block fraudulent advertisers but in some cases actively assisted them. The complaint cites internal Meta documents obtained by Reuters last year that outlined the vast scale of scam advertising on the company's platforms and Meta's own 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 approximately 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. The state alleges that Meta's artificial intelligence ad creation tools sometimes helped scammers design more effective fraudulent marketing, and that instead of consistently blocking suspected fraudulent advertisers, 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 lawsuit stated.
The company has disputed the Reuters reporting. In a statement Thursday, Meta spokesperson Andy Stone called the lawsuit "unfounded" and said the company regularly partners with law enforcement to disrupt scam networks.
"The attorney general refused to engage with us on ways we protect Rhode Islanders from scams, and has instead hired an out-of-state private law firm to concoct a lawsuit that ignores the full range of actions we take to combat scams every day," Stone said.
Stone noted that Meta has removed more than 159 million scam ads and launched new anti-fraud tools in the past year alone, including alerts flagging suspicious friend requests on Facebook, expanded advertiser verification and warnings about risky device-linking requests on WhatsApp.
As BrightU.AI's Enoch states, "Meta acknowledges that scammers exploit its platform using celebrity impersonation ads, invests in enforcement to combat them, but faces lawsuits alleging it profits from addictive features while misrepresenting user well-being."
Elderly users targeted as scams remain readily findable, state says
The Rhode Island complaint alleges that many scam ads specifically targeted elderly people, citing an investigation by the nonprofit Center for Countering Digital Hate that 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.
The state provided examples of ads that promised to "reverse Alzheimer's in 45 days," with more than 2,000 versions of that single scam ad active in Meta's ad library. Other examples included ads impersonating public figures and trusted institutions like banks. Rhode Island cited 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.
Beyond scams, the attorney general's office said it found that Meta was similarly failing to police other types of illicit ads, such as those for AI apps used to create deepfake pornography. The state provided an example of an ad that 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.
Public survey data cited by Rhode Island, as well as 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, according to the lawsuit.
The state also alleged that Meta sought to defeat regulatory efforts to require advertiser verification, and that "a banned advertiser can reappear in the time it takes to provide a new email address or phone number."
Meta pushes back, cites anti-fraud progress
Meta has maintained that it is making progress in combating fraud. At a White House event on cybercrime prevention Wednesday, U.S. Attorney General Todd Blanche called the company an "incredible partner to law enforcement." The company has also pointed to its partnership with law enforcement agencies to disrupt scam networks and its development of new tools to protect users.
However, 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 state argued that Meta's assurances to users are contradicted by the evidence of ongoing fraud.
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," Neronha said in a press release. "When companies, big or small, take advantage of Rhode Island consumers, this office will do everything within our authority to hold them to account."
The case represents a new front in the legal battles facing Meta, which has already agreed to pay up to $18 billion in a settlement with nearly all U.S. states over claims it designed its platforms to addict children, and was ordered this week to pay $25 billion in a New Mexico privacy case. Rhode Island's suit focuses specifically on the economic harm caused by scam advertising, arguing that Meta's business model creates incentives to tolerate fraud rather than eliminate it.
As the lawsuit moves forward, it is likely to test whether state consumer protection laws can force Meta to change how it polices advertising on its platforms, and whether the company's voluntary measures are sufficient to protect users from the millions of scam ads that continue to appear daily. For now, Rhode Island has taken the first step in what could become a broader legal reckoning for one of the world's largest digital advertising companies.
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