Facebook executives knew the company overestimated the potential reach of ad campaigns, marketers who are suing the platform allege in new court papers.
“Facebook’s internal documents show that Facebook personnel knew for years that the Potential Reach metric that it provides to Facebook advertisers on its advertisement purchasing interfaces (including on Ads Manager and Power Editor) was inflated and misleading,” the marketers allege in an amended complaint filed Thursday with U.S. District Court Judge James Donato in San Francisco.
The new complaint marks the latest development in a lawsuit initially filed in August of 2018 by advertisers who alleged that Facebook induced them to purchase ads and pay higher prices for them by inflating the number of users the ads could reach.
Current plaintiffs include the Colorado-based e-commerce store operator DZ Reserve, which alleges that it purchased ads on Facebook for around $1 million between December of 2017 and December of 2018.
The original complaint's allegations of reach inflation were based on reports by outside groups, including the industry organization Video Advertising Bureau, as well as a survey commissioned by the plaintiffs.
The Video Advertising Bureau reported in 2017 that Facebook's estimates of audience reach in every U.S. state were higher than the states' populations, according to the U.S. Census Bureau.
In the newest version of the lawsuit, the advertisers say that Facebook employees were aware of complaints about the potential reach metric since September of 2015, but failed to respond appropriately.
“Notwithstanding their own internal acknowledgement that Potential Reach was inflated, Facebook executives did nothing,” the new complaint alleges. “Instead, Facebook took steps to obfuscate the issue, and even to cover it up.”
The advertisers add that Facebook's “talking points” included statements that the potential reach figure wasn't designed to align with the census.
“Facebook never acknowledged externally what it admitted internally: that its Potential Reach metric was inflated, and that the inflation was partly due to duplicate and fake accounts,” the new complaint alleges.
Facebook previously argued in court papers that estimates about campaigns' reach are not guarantees, and that they don't affect billing.
“Advertisers are charged based on specified outcomes such as website conversions, clicks, or impressions an ad receives,” the company wrote in papers submitted to Donato last year. The company added that pricing depends on Facebook's auction system.