Rhode Island has filed a lawsuit against Meta, accusing the social media giant of allowing fraudulent advertisements to spread across Facebook, Instagram and WhatsApp while profiting from the activity. Filed on October 22, 2026, by Rhode Island Attorney General Peter Neronha, the lawsuit makes the state the first in the United States to sue Meta specifically over allegations that it knowingly tolerated and benefited from widespread scam advertising. The case follows similar legal action by other organizations and local government entities, intensifying scrutiny of how Meta polices the advertisements shown to its users.
Image Courtesy : NurPhoto/Getty Images
The complaint alleges that Meta failed to adequately restrict deceptive advertisements despite having the technology, internal data and resources to identify many of them. According to the state, the company represented to users and regulators that it had sophisticated systems to detect and remove scams, but continued to distribute fraudulent ads that caused financial harm to consumers. The lawsuit argues that Meta's advertising infrastructure did more than simply host questionable promotions: its targeting, optimization and delivery tools allegedly helped advertisers reach people likely to respond to deceptive offers.
Meta has rejected the allegations and says it actively works to combat fraud. The company has pointed to the large number of scam advertisements it removes and its efforts to disrupt fraudulent networks. The lawsuit has not yet established that Meta violated the law; its claims will need to be tested through the legal process.
The lawsuit was filed in Providence County Superior Court under Rhode Island's Deceptive Trade Practices Act. The state alleges that Meta knowingly exposed consumers to advertisements promoting fraudulent investments, fake health products, deceptive financial opportunities, impersonation schemes and other unlawful or misleading offers. It also argues that the company's business practices enabled some scammers to refine their advertisements and target people who were especially susceptible to their pitches.
One of the central allegations concerns the way Meta's advertising systems use data and automated optimization to find audiences. Advertisers can select audiences and rely on platform algorithms to deliver ads to people predicted to be more likely to engage. According to Rhode Island, those capabilities can become especially harmful when the advertiser is promoting a scam, because the same systems that help legitimate businesses reach customers may also help fraudsters identify and repeatedly approach potential victims.
The complaint also alleges that Meta's automated tools sometimes assisted with the creation and optimization of fraudulent advertising. In other cases, the state claims, the company did not consistently block advertisers suspected of fraud and instead sometimes charged them higher prices. Rhode Island argues that such practices created a financial incentive to tolerate high-risk advertisements instead of removing them altogether. These are allegations made by the state, not findings already established by a court.
The case draws on internal company documents previously reported by Reuters. Those documents, as described in the complaint and news coverage, suggested that Meta estimated it was displaying approximately 15 billion higher-risk scam advertisements each day. The state also cites an estimate that roughly 10% of Meta's 2024 revenue—about $16 billion—came from advertisements involving scams or restricted goods. The figures cover a broader category of high-risk and prohibited advertising and should not be interpreted as a definitive court-established accounting of revenue from proven scams alone.
The lawsuit describes several types of advertisements that Rhode Island says were able to circulate on Meta's services. Some allegedly promoted investment opportunities that falsely promised returns or used the names and images of trusted financial professionals to make fraudulent offers appear legitimate. Others promoted purported medical treatments or supplements with misleading claims, potentially exploiting people who were searching for help with serious health conditions.
Scammers often rely on familiarity and trust. A fraudulent advertisement may imitate a bank, use the image of a public figure or present itself as a legitimate health company. A person who clicks may then be directed to an external website, messaging service or investment group where the fraud continues. The use of WhatsApp in some reported schemes illustrates how an advertisement seen on one platform can lead a victim into a private conversation where requests for money and personal information become harder for others to detect.
Rhode Island also cited examples of advertisements making extraordinary medical promises, including claims that a product could reverse Alzheimer's disease in a matter of weeks. According to the complaint, one such campaign appeared in more than 2,000 versions in Meta's advertising library. The state says the scale and repetition of such ads raise questions about whether the company's screening and enforcement systems are adequately identifying misleading campaigns.
Older adults are among the groups the state says may be particularly vulnerable to these schemes. People targeted by fraudulent investment or health advertisements can lose savings, disclose sensitive information or be drawn into repeated payments. The consequences may extend beyond the initial loss, especially when scammers use stolen personal information to target victims again or impersonate them elsewhere.
The complaint also raises concerns about advertisements for tools that facilitate nonconsensual sexual deepfakes. Although that issue is distinct from financial fraud, Rhode Island argues that it reflects a broader challenge with screening illegal or harmful promotions before they reach users. The lawsuit's overall focus is the company's alleged handling of deceptive and prohibited advertising, not simply the presence of individual bad actors on its platforms.
Meta disputes the state's characterization of its advertising practices and says it takes action against fraud across its platforms. The company has reported removing more than 159 million scam advertisements over the preceding year and has highlighted additional anti-fraud measures, including expanded advertiser verification and warnings designed to help users recognize suspicious activity. It has also said it works with law enforcement to investigate and disrupt scam networks.
A Meta spokesperson criticized Rhode Island's decision to sue, arguing that the attorney general had declined to engage with the company about its existing protections and that the complaint failed to account for the full scope of its anti-scam efforts. Meta has characterized the lawsuit as unfounded and has indicated that it will contest the claims.
The disagreement highlights a central question in the case: how should the law distinguish between a platform that is targeted by criminals and a company that allegedly allows harmful advertising to continue because it benefits financially? Social media companies operate large advertising systems that process enormous volumes of promotions, making it difficult to manually review every advertisement. Automated detection can help identify suspicious activity, but fraudsters can adapt their tactics, create new accounts and modify advertisements to avoid detection.
The state argues that these operational challenges do not excuse failing to act when a company has evidence that advertisements are fraudulent. Meta, meanwhile, maintains that it actively removes scams and invests in protections. The court will need to consider the evidence behind these competing positions rather than assuming that either the existence of scam ads or the company's removal statistics alone resolve the legal question.
The state is seeking several forms of relief. These include civil penalties for alleged violations of Rhode Island's consumer-protection law, restitution for affected consumers, and the return of profits that the state claims Meta obtained through unlawful conduct. Rhode Island is also asking the court to order changes intended to prevent deceptive advertisements from continuing to circulate. The complaint further seeks the possibility of a court-appointed monitor, auditor or receiver to oversee compliance with any relief ordered by the court.
If the state succeeds, the case could place additional pressure on Meta to change how it screens advertisers, identifies suspicious campaigns and responds when its systems flag potential fraud. It could also prompt closer scrutiny of whether platforms should be required to verify advertisers' identities more rigorously, particularly in categories where financial losses or other serious harm are common.
The case could have implications beyond Rhode Island because Facebook, Instagram and WhatsApp serve users across the United States. A ruling requiring changes to certain advertising practices could influence how Meta manages similar risks in other markets. However, the lawsuit does not automatically establish a nationwide requirement, and any eventual remedies will depend on the court's decisions and the scope of the legal relief granted.
Rhode Island is not the first party to bring legal action over Meta's handling of scam advertisements. Santa Clara County in California filed a similar lawsuit in May 2026, and the Consumer Federation of America has also pursued legal action concerning scam advertising. Rhode Island's significance lies in becoming the first U.S. state to bring a lawsuit against Meta specifically over these allegations.
The lawsuit arrives amid growing debate about the responsibility technology companies should bear for advertisements delivered through their platforms. Social media advertising is built around personalized targeting, automated delivery and rapid optimization. Those features help businesses find customers, but they can also give fraudulent advertisers tools to reach large audiences with relatively little effort.
For consumers, the practical challenge is that a paid advertisement can appear alongside legitimate promotions without necessarily being trustworthy. A familiar logo, professional-looking website or endorsement from a recognizable face does not guarantee that an offer is genuine. Users should be especially cautious of advertisements promising unusually high investment returns, miracle cures, urgent financial opportunities or requests to move conversations into private messaging channels. Suspicious ads can be reported through the platform, while suspected financial fraud should also be reported to the appropriate consumer-protection or law-enforcement authorities.
For regulators, the question is how to encourage stronger safeguards without treating every scam that appears online as automatic proof of wrongdoing by the platform. Relevant evidence may include what a company knew about a particular advertising campaign, how its detection systems responded, whether repeat offenders were permitted to return and whether its public statements accurately described its practices.
Rhode Island's case seeks to establish that Meta's alleged conduct went beyond imperfect moderation and violated state consumer-protection law. Meta disputes that characterization, and the allegations remain to be resolved in court.
The lawsuit is therefore an important new legal challenge, but not a final judgment against the company. Its outcome may help clarify the responsibilities of social media platforms when fraudulent advertising appears in systems they operate and monetize. For now, the central issue is whether Meta took reasonable steps to prevent scams—or, as Rhode Island alleges, whether its pursuit of advertising revenue came at the expense of consumer protection.