By Jeff Horwitz and Katie Paul
Oct 22 (Reuters) – Rhode Island sued Meta Platforms 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 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.
“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.
Meta said it would fight the lawsuit, calling it “unfounded,” and noting that 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,” Meta spokesperson Andy Stone said in a statement.
Stone noted that Meta has removed more than 159 million scam ads and launched new anti-fraud tools in the past year alone, like alerts flagging suspicious friend requests on Facebook, expanded advertiser verification and warnings about risky device-linking requests on WhatsApp.
HIGH-RISK SCAM ADS
The suit was filed a day after a judge in New Mexico ordered Meta to pay that state $25 billion in a case in which a jury found the company had misled consumers about the privacy of their data. Meta also agreed in August to pay up to $18 billion in a settlement with nearly all US states to resolve claims it designed its platforms to addict children.
Rhode Island’s complaint 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.
The company 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,” 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. At a White House event on cybercrime prevention on Wednesday, US Attorney General Todd Blanche called the company an “incredible partner to law enforcement.”
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.”
(Reporting by Jeff Horwitz in Oakland and Katie Paul in New York; Editing by Kenneth Li and Will Dunham)
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