• by Wendy Davis , 5 hours ago

Facebook users who say they lost money after responding to fake ads on the platform are urging a federal appellate court to allow their lawsuit against the company to proceed.

"Meta has the capacity to combat deceptive Facebook ads and keep scammers off the platform," lawyers for the users argue in papers filed Wednesday with the 9th Circuit Court of Appeals.

They add that Meta lacks an incentive to remove fraudsters "because scam ads have generated and continue to generate tens of billions of dollars in ad sales."

The new papers come in a dispute dating to 2021, when consumers including Oregon resident Christopher Calise filed a class-action complaint against Meta over online scams. Calise specifically alleged that he was bilked out of around $49 after attempting to purchase a car-engine assembly kit advertised on Facebook.

The initial complaint, which drew heavily from reports in The New York Times,BuzzFeed and other publications, alleged that Facebook's sales force “aggressively” solicits ad sales in China, even though an internal study allegedly showed that nearly 30% of ads placed by China-based advertisers violated a Facebook policy.

The plaintiffs claim in a class-action complaint that Meta failed to honor representations in its terms of service -- including a prior statement that it will "take appropriate action" if it learns of harmful content. (Meta revised that wording after the lawsuit was filed, and now says it "may" take appropriate action regarding harmful content.)

The complaint also notes Meta says in the "community standards" that it removes material that "purposefully deceives, willfully misrepresents or otherwise defrauds or exploits others for money or property.”

U.S. District Court Judge Jeffrey White in the Northern District of California ruled in September that the allegations in the complaint, if proven true, could support claims that Meta broke its contract with users and violated its duty of good faith.

Meta is now appealing that decision to the 9th Circuit, arguing that its terms of service and community standards govern users' conduct, and do not impose obligations on the company.

The tech platform added that the terms of service "speak only in aspirational terms about Meta’s ability to remove" fraudulent content, and don't promise to take "concrete steps to effectuate that aspiration."

The plaintiffs disagree, arguing to the appellate court that the terms of service and community standards "contractually obligated Meta to take action against a specific type of harmful content -- deceptive ads displayed by scammers."

Earlier in the proceedings, Meta argued that it was protected from all claims by Section 230 of the Communications Decency Act, which broadly immunizes web companies from liability for crimes by users.

The 9th Circuit Court of Appeals ruled in 2024 that Section 230 did not protect Meta from allegations that it broke its contract with users by violating its own terms of service, but the court also said at the time that it wasn't clear whether the terms of service created an enforceable contract.

Meta currently faces a separate lawsuit over fake ads filed by the watchdog Consumer Federation of America.

That suit draws on 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 is likely to be a scammer.

The 9th Circuit hasn't yet indicated when it will rule on Meta's appeal of White's ruling in the case filed by Calise.