• by Wendy Davis  @wendyndavis, November 1, 2024

The federal Consumer Financial Protection Bureau may sue Meta over financial ads on the platform, the company disclosed in a Thursday night filing with the Securities and Exchange Commission.

Meta said in the filing that it was notified in September that agency staff may recommend legal action over the “alleged receipt and use for advertising of financial information from third parties through certain advertising tools as well as our related user disclosures and controls.”

Meta added that it disagrees with the claims under consideration, and believes an enforcement action isn't warranted. The company declined to comment further to MediaPost.

The Consumer Financial Protection Bureau, headed by former Federal Trade Commission member Rohit Chopra, hasn't yet indicated exactly how Meta's alleged use of financial information in advertising may have violated the law. 

Should the agency sue Meta, the company is likely to argue that it isn't subject to regulation by the Consumer Financial Protection Bureau.

The bureau is empowered to police certain practices by financial services providers -- such as banks -- as well as companies that offer "material services" to those providers. 

In 2022, the agency said in an “interpretive statement” that material services include certain forms of targeted advertising.

“Digital marketers that are materially involved in the development of content strategy by identifying or selecting prospective customers and/or selecting or placing content to affect consumer engagement, including purchasing or adoption behavior, typically provide a material service,” the agency wrote.

That interpretation hasn't yet been tested in court.

Regardless of whether the interpretation will hold up, the fact that the agency issued the statement likely put Meta on notice it might be investigated over financial ads, according to Rick Borden, a partner in the data strategy, privacy and security group at the law firm Frankfurt Kurnit Klein & Selz.

“It was a direct volley across the bow” Borden says. “They put this out two years ago. At some point, there was going to be an investigation of the large players in digital advertising.”

“I would expect that Meta knew this and was prepared, and may have had reams of information ready to provide,” he adds.

Meta has previously faced claims that its ad targeting tools facilitated discrimination. In 2022, the company said it would revise its ad targeting system to settle a complaint by the Department of Housing and Urban Development, which had alleged that the company violated civil rights laws by blocking housing ads from being shown to people based on factors such as race and gender.

At the time Meta said it would also apply the new machine learning ad targeting system to ads for jobs and credit.

John Davisson, senior counsel at the Electronic Privacy Information Center, cheered news of the current investigation.

“It's encouraging to see the CFPB scrutinizing Meta's advertising practices -- especially with respect to financial products,” he said, adding that consumers' financial data can be particularly sensitive.