Two Facebook users who say they were fleeced after attempting to purchase merchandise advertised on the platform are suing the company for failing to block ads by fraudsters.
“Because Facebook prioritizes revenue growth over the safety of its users as a matter of corporate policy, Facebook users continue to be bilked out of billions of dollars by scammers while Facebook continues to collect billions of dollars in revenues from those same scammers,” Nebraska resident Anastasia Groschen and Oregon resident Christopher Calise allege in a class-action complaint filed Wednesday in U.S. District Court for the Northern District of California.
Calise alleges that he lost around $49 after attempting to purchase a car engine assembly kit that was advertised on the site. He says he paid with a debit card, but the merchandise never arrived and he was unable to obtain a refund.
Groscen says she lost around $31 after attempting to purchase an activity board for her toddler, after clicking through a Facebook ad for the product. Instead of the activity board, she received “a cheap wooden” puzzle.
The complaint claims that Facebook “actively solicits, encourages, and assists scammers in numerous ways.”
For instance, according to the complaint, Facebook's sales teams have allegedly “presented at conferences heavily attended by known scammers, socialized with known scammers for business development purposes, and met revenue quotas by encouraging known scammers to continue buying Facebook ads.”
They also allege that the sales force “aggressively” solicits ad sales in China, although an internal study allegedly shows nearly 30% of ads placed by China-based advertisers violated a Facebook policy.
Among other claims, the users contend that Facebook's ad practices are negligent, and that the company broke its contract with users.
The contract-related count centers on Facebook's terms of service, which state it removes content “that purposefully deceives, willfully misrepresents or otherwise defrauds or exploits others for money or property.”
The users are seeking monetary damages and an injunction that would require Facebook to police ads before they appear on the platform.
Groschen and Calise could have an uphill battle in court, given that Section 230 of the Communications Decency Act generally protects web companies from liability for content created by third parties, including advertisers.
In 2008, a federal court in California relied on Section 230 to dismiss a lawsuit against Google for allegedly displaying fraudulent ringtone ads.
"Providing third parties with neutral tools to create Web content is considered to be squarely within the protections of (the law)," U.S. District Court Judge Jeremy Fogel in San Jose, California wrote in that case. "Even if a service provider knows that third parties are using such tools to create illegal content, the service's provider's failure to intervene is immunized."
In some cases, however, judges have created exceptions to Section 230 in situations where web companies actively develop problematic ads.
But it's not clear that the allegations against Facebook would support a claim that the company developed the fraudulent ads at the center of the lawsuit.