• by Wendy Davis , 4 hours ago

The watchdog Consumer Federation of America is urging a judge to allow it to proceed with a lawsuit alleging that Meta Platforms misleads Facebook and Instagram users about the risk that they will encounter scams, and by profiting from fraudulent ads.

Meta has argued that the lawsuit should be dismissed for several reasons, including that Section 230 of the Communications Decency Act protects web companies from liability for illegal activity by third parties -- including advertisers that post fake ads.

The Consumer Federation of America counters in papers filed this week that Section 230 shouldn't protect Meta from its own statements regarding its platform's safety.

"Meta routinely touts the efforts it purports to take to keep its users safe from scams," the group argues in a legal memo filed in the District of Columbia Superior Court.

"Meta makes these misrepresentations in its terms of service and community standards, scam prevention hub, press releases, and the media," the watchdog adds. "None of Meta’s misrepresentations involve anything other than Meta’s own speech."

Meta's terms of service say it "will take appropriate action" if it detects misuse of its products or harmful conduct, and the community standards section says Meta removes content and combats behavior "that purposefully employs deceptive means…to either scam or defraud users and businesses, or to drive engagement.”

Meta's alleged misrepresentations "were part of a deliberate strategy to deceive," the consumer group argues.

"Meta might prefer that Section 230 grant it sweeping immunity, but that is not the law," the watchdog writes. "Instead, Meta, like all merchants in D.C., must conduct its business honestly."

The watchdog's argument comes in a battle dating to April, when the organization claimed that Meta violates the District of Columbia's consumer protection law, which prohibits misrepresenting "material facts."

The complaint drew on reporting about fraud on the company's platforms, including a recent Reuters report alleging that Meta expected to earn around 10% of its 2024 revenue, amounting to around $16 billion, from ads for scams, illegal gambling and the sale of banned goods.

That report also alleged that Meta charges more for ads if its system determines the advertiser likely is a scammer.

In May, Meta sought a fast dismissal of the lawsuit, arguing that the claims actually center on third-party content -- meaning ads created by outside companies.

Meta argued that the consumer group "seeks to hold Meta liable for providing content-neutral ad tools that third parties used to disseminate their own allegedly fraudulent content."

The company added that the organization's claims, even if framed as centering on misrepresentation, are "inextricably linked" to how Meta moderates material provided by outside parties.

Meta has faced other lawsuits over fake ads on its platform, and judges throughout the country have reached different conclusions regarding those cases.

For instance, a federal judge in Maryland dismissed two separate lawsuits against Meta over online scams, ruling that the company is protected by Section 230.

But the 9th Circuit Court of Appeals ruled in a separate fake-ads lawsuit in California that Section 230 doesn't protect the tech company from claims that it broke its contract with users by failing to live up to representations in its terms of service.