Meta founder Mark Zuckerberg may be empathizing with Gulliver, the pitiful helpless giant who, legend tells us, found himself pinned down by little people. Though sometimes seen as a children’s work, “Gulliver’s Travels” is in fact a savagely biting 1726 satire mocking the small-minded pettiness of the inhabitants and preposterous leaders of Lilliput.
Zuckerberg, like Gulliver, has had no particular problem dealing with the likes of the White House, Justice Department and other Brobdingnagian institutions but he is finding it harder to have his way with the smaller states that are seldom seen as players in the great dramas that play out on the public stage.
But such Lilliputian states as New Mexico and Little Rhody are another matter. It was just last week that a state judge in the Land of Enchantment leveled a $25 billion fine on Meta after a jury found Meta had violated the state’s consumer protection laws more than 43 million times. At $5,000 each, New Mexico calculates that requires a $25 billion penalty.
Now Rhode Island is accusing Meta of unlawfully profiting from and participating in the creation of billions of dollars in scam advertising, all while claiming it was working diligently to protect its users.
“For a company that engages so many Rhode Islanders and Americans, maintaining high standards for consumer safety should be of the utmost importance,” said state Attorney General Peter Neronha. “Meta knowingly exposed vulnerable users to fraud and scams, and made enormous profits in doing so.”
It is the first such scams-related case to be brought against Meta by a U.S. state, following a similar lawsuit filed in May by California’s Santa Clara County. The New Mexico case dealt primarily with privacy and consumer protection laws.
The complaint 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.
Meta called the lawsuit “unfounded” and said it would fight it. “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,” Meta spokesperson Andy Stone said in a statement.
Ineffective and dangerous
“Meta has helped create, refine, and distribute advertisements that promoted fraudulent schemes, deceptive offers, impersonation scams, fake investment opportunities, false Medicare and Social Security benefit offers, ineffective or dangerous health supplements or treatments, and other unlawful or deceptive conduct directed at consumers, including consumers in Rhode Island,” Neronha said.
“Importantly, Meta provided design assistance, audience-selection tools, targeting capabilities, optimization systems, delivery services, analytics, and related services that enabled advertisers to identify, engage, and repeatedly solicit consumers likely to respond to fraud ads,” he said.
Rhode Island’s complaint cites Reuters reporting from last year on internal Meta documents outlining the alleged 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.
The documents allege that 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.
“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 states.
Not a stranger
Meta is not stranger to courtrooms. It has paid a number of claims in the past, including $5 billion to settle with the Federal Trade Commission, $725 million to settle a consumer class action and $459 million to settle claims brought by 46 states.
It faces a tidal wave of other legal actions filed by state and local agencies and by private attorneys acting on behalf of consumers.