Meta Trouble: 2 Million Small Businesses Eligible to Join Ad Fraud Suit Against Facebook

Lucas NolanApril 1, 2022

A lawsuit accusing Facebook of purposefully overstating its advertising audience to overinflate ad costs was recently awarded class-action status, allowing the case to include more than 2 million small ad buyers as plaintiffs.

AdAge reports that a lawsuit claiming that Facebook (now known as Meta) purposefully overstated its advertising audience has been awarded class-action status. The lawsuit will include 2 million small ad buyers as plaintiffs after a federal judge in San Francisco ruled that despite what he called a “blunderbuss of objections” from Facebook, the lawsuit can proceed as a class action on behalf of small business owners and individuals who bought ads on Facebook and Instagram since August 15, 2014.

Mark Zuckerberg introduces Meta (Facebook)

Mark Zuckerberg surrounded by guards ( Chip Somodevilla /Getty)

Court filings in 2021 claimed that Facebook’s audience-measuring tool was known by Mark Zuckerberg and his executives to be unreliable as it was skewed by fake and duplicate accounts. Despite this, advertisers were still charged for ads based on the estimates made by the audience-measuring tool, overcharging them.

Facebook’s lawyers have argued that the company has since made “updates” to improve the estimates made by the tool. They also objected to the class-action status request saying that ad buyers did not show that all class members uniformly relied on the metrics to increase their spending.

U.S. District Judge James Donato said: “It may be that class members differ in advertising budgets and scope of purchases, as Meta suggests, but Meta has not shown that these differences,” make the case unsuited to qualify as a class action.

In 2019, Facebook agreed to a settlement of $40 million over a class-action lawsuit brought by advertisers who alleged that they overpaid for video ads based on Facebook’s overstated vide-viewing metrics. The current class-action case was filed in 2018 by an e-commerce company that spent over $1 million on Facebook ads and a seller of firearm accessories who spent approximately $350.