Meta is sued by U.S. Virgin Islands over ads for scams, dangers to children

Facebook's Meta logo sign is seen at the company headquarters in Menlo Park, Calif. THE CANADIAN PRESS/AP-Tony Avelar

The attorney general of the U.S. Virgin Islands has sued Meta Platforms, accusing the Facebook and Instagram owner of deliberately profiting from advertisements for scams and failing to keep its social media platforms safe for children.

“Meta knowingly and intentionally exposes its users to fraud and harm. It does so to maximize user engagement and, in turn, its revenue,” states the lawsuit, which was filed in the Superior Court of the Virgin Islands on St. Croix.

The lawsuit repeatedly cites an article by Reuters last month that revealed how Meta internally projected that 10 per cent of its 2024 revenue – about US$16 billion – would come from ads for scams, illegal gambling and banned products. Based on a cache of internal company documents, the article also reported that Meta doesn’t block advertisers suspected of scams unless its algorithms are 95 per cent certain that the marketer is engaging in misbehavior.

Following the story, two U.S. senators called on the Securities and Exchange Commission and the Federal Trade Commission to look into the matter and “pursue vigorous enforcement action where appropriate.”

The Virgin Islands lawsuit seeks penalties for violating its consumer laws. In a statement, Attorney General Gordon C. Rhea said it “marks the first effort by an attorney general to address reports of rampant fraud and scams on Meta’s platforms.”

The lawsuit also accuses Meta of misleading the public about its efforts to protect children and adults on its platforms, including Facebook and Instagram.

“Meta repeatedly touts the ‘safety’ of its platforms to its users, parents, regulators, and Congress,” the Virgin Islands lawsuit states. “Meta consistently, and intentionally, fails to implement the policies it writes.”

In response to the lawsuit, Meta spokesman Andy Stone referred Reuters to past company statements calling allegations that it has failed to protect consumers baseless.

“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,” he said, adding that scam reports from users of Meta’s platforms have fallen by half over the last 18 months.

Stone said that the claims regarding Meta’s failure to make the platform safe for young users were also without merit.

“We strongly disagree with these allegations and are confident the evidence will show our longstanding commitment to supporting young people,” he said.

In August, Reuters reported that an internal Meta document outlining its policies on chatbot behavior permitted the company’s artificial intelligence creations to “engage a child in conversations that are romantic or sensual.” Meta responded to that report by saying it removed portions of the guidelines that allowed chatbots to flirt and engage in romantic roleplay with minors.

(By Jeff Horwitz in Oakland, California. Edited by Steve Stecklow.)