Meta Challenges Lawsuits Over Facebook Ads Used in Stock Investment Scams

Meta is seeking to dismiss lawsuits brought by investors who claim they lost money after being targeted by fraudulent stock investment advertisements on Facebook and Instagram.

According to the complaints, scammers used sponsored ads featuring fake endorsements from celebrities, financial commentators and investment firms to attract victims. After clicking the ads, users were directed to WhatsApp groups, where fraudsters posing as investment advisers recommended buying shares in little-known overseas companies.

Investigators allege the scammers artificially inflated the share prices before selling their own holdings, causing the stocks to collapse and leaving investors with substantial losses. Federal prosecutors have already brought criminal charges against some of the individuals behind the schemes, although Meta is not accused of participating in the fraud itself.

The investors argue Meta helped facilitate the scams by allowing the advertisements to run on its platforms and by providing AI-powered advertising tools that allegedly assisted in creating and optimizing the campaigns.

A U.S. federal judge previously rejected Meta's attempt to dismiss one case under Section 230, finding it plausible that Meta's advertising technology may have contributed to generating some of the deceptive content rather than merely hosting user-created advertisements.

Meta has since advanced a different legal argument, contending that because the alleged losses stemmed from stock purchases, the claims should fall under U.S. securities law instead of state consumer protection law. If accepted, the lawsuits would face the stricter legal standards that apply to securities fraud cases.

The cases could influence future litigation involving investment scams that originate through social media advertising before moving victims onto encrypted messaging platforms such as WhatsApp.