• by Wendy Davis , 8 hours ago

Three Meta Platforms users who say they were bilked by scammers are suing over Facebook and Instagram ads that promoted fraudulent crypto schemes.

"Defendants actively participate in, assist, and encourage the creation, placement, and targeting of scam ads," Florida resident Niroshini Dassanayake, Georgia resident Kenneth Gugel and Illinois resident Andrew Svoboda allege in a class-action complaint filed late last week in San Francisco federal court.

They allege that Facebook or Instagram ads led them to WhatsApp groups where they encountered scammers. The scammers on WhatsApp in turn directed the plaintiffs to transfer money or cryptocurrency to wallets.

When the plaintiffs tried make withdrawals, "the scammers would not allow them to do so, revealing that the displayed balances were illusory and the deposited funds were gone," the complaint alleges.

Among other allegations, the plaintiffs contend that Meta's generative artificial intelligence tools "have enhanced the effectiveness of fraudulent advertisements by generating hundreds of variations which are optimized to drive engagement by vulnerable users."

The plaintiffs add that Meta also knows or should know its artificial intelligence tools "contribute to the creation and optimization of false and deceptive advertisements and that their algorithms steer false and misleading advertisements to target vulnerable consumers."

The complaint includes a claim that Meta's business practices "deceptively lead reasonable consumers" to believe it removes fraudulent ads from its platforms.

Meta has faced other lawsuits over scam ads on its platforms, including at least one brought last year by people who alleged they lost money as a result of Facebook ads that steered users into WhatsApp groups that perpetuated a pump-and-dump scheme. As with the new lawsuit, the plaintiffs in the 2025 case also alleged that scammers used Meta's AI tools to create the ads.

Meta argued in that matter that it was protected by Section 230 of the Communications Decency Act, which generally immunizes companies from liability for illegal activity by advertisers and other third parties.

But a district court judge rejected the company's bid for a rapid dismissal, ruling that if the allegations in the complaint were true, Meta would have played too great a role in creating the ads to be protected by Section 230. The judge later threw out the case on the grounds that the claims in the suit were overridden by federal securities laws.