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Santa Clara County filed a lawsuit this week alleging that Meta Platforms knowingly monetises fraudulent ads that generate roughly $7 bn in annual revenue, adding to a growing slate of legal actions against the social‑media giant.The County’s Allegations Against Meta’s Ad EcosystemThe complaint claims Meta “facilitates and monetises” deception by allowing scam ads to run unless the company is at least 95 % certain the advertiser is fraudulent. Below that confidence threshold, advertisers are charged a premium fee to keep their ads live. The lawsuit cites internal documents showing the use of sophisticated AI tools that target “vulnerable consumers” with schemes ranging from bogus financial products to fake celebrity fund‑raisers.Scam categories include cryptocurrency schemes, false medical cures, ineffective supplements, and celebrity impersonations.California residents reported over $2.5 bn in losses to scammers in 2024, with seniors disproportionately affected.Financial Stakes: $7 B in Scam‑Ad Revenue and $200 B Corporate TurnoverMeta’s annual revenue exceeded $200 bn in 2025, underscoring the scale of the alleged $7 bn scam‑ad stream. The lawsuit arrives alongside a separate consumer‑protection case filed by the Consumer Federation of America, which also targets Meta’s profit‑driven approach to scam mitigation.Broader Implications for Platform Liability and Consumer ProtectionThe suit follows a March 2026 California jury verdict that held Meta and YouTube liable for addictive design features harming a young user, a decision viewed as a bellwether for future platform‑responsibility claims. Combined with recent rulings in New Mexico and a $375 m jury award for child‑endangerment, the Santa Clara action could pressure Meta to overhaul its ad‑review algorithms and increase transparency.What the Future Holds for Meta’s Legal LandscapeMeta spokesperson Andy Stone described the lawsuit as a distortion of the company’s motives, emphasizing ongoing anti‑scam efforts, including the removal of 159 million scam ads last year and partnerships with law‑enforcement agencies. Nonetheless, legal analysts expect intensified scrutiny, potential regulatory interventions, and further class‑action filings as state prosecutors treat the platform’s ad‑monetisation model as a public‑policy issue.

The Lawsuit Against Meta California’s Santa Clara county has sued Meta Platforms, alleging it has profited from Facebook and Instagram ads promoting scams in violation of California’s false advertising and unfair business practices laws. Allegations of Tolerating Fraudulent Advertising The lawsuit – filed on Monday in Santa Clara county superior court on behalf of all California residents – accuses the social media giant of tolerating fraudulent advertising on a global basis. The suit seeks restitution, civil damages and an order prohibiting Meta from engaging in unfair business practices. Revenue from High-Risk Scam Ads Citing leaked internal documents first reported by Reuters last year, the complaint alleges that the company earned as much as $7bn in annual revenue from so-called “high-risk” scam ads which show clear signs of being fraudulent. Meta's Response and Defense Meta said it intends to defend itself against the claim. “This claim relies on Reuters reporting that distorts our motives and ignores the full range of actions we take to combat scams every day,” said a Meta spokesperson, Andy Stone. “We aggressively fight scams on and off our platforms because they’re not good for us or the people and businesses that rely on our services.“ The Impact on Users and the Legal Proceedings In the suit, Santa Clara alleges that Meta materially contributed to an epidemic of fraud by allowing middlemen to sell accounts to place ads that were protected against enforcement, and targeting scam ads at users who had clicked on similarly bogus offerings in the past. The county will retain full control over decisions involving the case, and outside law firms will only be paid if the county wins.

Tens of thousands of people have been hired by Scale AI – a firm 49% owned by Meta – to train artificial‑intelligence models by scraping Instagram accounts, harvesting copyrighted artwork and transcribing pornographic soundtracks, according to the Guardian.Scale AI promotes its Outlier platform as a flexible, expert‑driven marketplace, recruiting professionals from medicine, physics and economics to "become the expert that AI learns from."Workers, however, say the reality diverges sharply from high‑level model refinement. They describe tasks that involve massive personal‑data scraping and content that many find morally uncomfortable.Outlier is managed by Scale AI, which holds contracts with the U.S. Pentagon and other defense companies. Its chief executive, Alexandr Wang, is hailed by Forbes as the world’s youngest self‑made billionaire, while former managing director Michael Kratsios served as science adviser to former President Donald Trump.One contractor noted that users of Meta platforms would be shocked to learn their photos and friends’ images are being harvested for AI training, with workers manually reviewing profiles to extract data.The Guardian interviewed ten Outlier contributors – many also journalists, graduate students, teachers or librarians – who took the gig work out of economic desperation. One said, "A lot of us were really desperate" and felt compelled to accept the unstable, low‑pay assignments.These gig workers, dubbed “taskers,” often feel they are training their own replacements, expressing “internalised shame and guilt” over contributing to the automation of creative professions.Law firm Clarkson, representing AI gig workers, estimates that hundreds of thousands of people worldwide now labor on platforms like Outlier. Taskers report bait‑and‑switch recruitment tactics, where advertised high salaries are replaced by lower‑paid projects after onboarding.All contributors are monitored through a tool called Hubstaff, which can screenshot browsers to verify work. While Scale AI claims the software is only for accurate payment, workers describe it as constant surveillance.Assignments have ranged from transcribing pornographic audio and labeling photos of dead animals or dog faeces, to annotating diagrams of infant genitalia and violent police scenarios. One doctoral student recounted being promised “no nudity” only to receive explicit porn clips.Scale AI says it shuts down any task flagged as inappropriate and does not accept projects involving child sexual‑abuse material or pornography, though workers note that publicly available images of minors have been used for training.Social‑media scraping tasks required workers to tag individuals by name, location and age, sometimes pulling data from accounts of users under 18. One task asked contributors to order Facebook photos by the subject’s age, prompting ethical unease.In addition to personal data, taskers were asked to harvest copyrighted artwork, with strict instructions to avoid AI‑generated images and select only hand‑drawn pieces. Scale AI maintains it does not ask workers to violate copyright standards.Scale AI’s client list includes major tech firms such as Google, Meta and OpenAI, as well as the U.S. Department of Defense and the government of Qatar, highlighting the growing demand for labelled data as AI models scale.Some workers reported interacting with ChatGPT and Claude, and speculated they might be training Meta’s upcoming model, code‑named “Avocado.”OpenAI announced it ended its partnership with Scale AI in June 2025, citing its supplier code of conduct that mandates ethical treatment of all workers.Despite irregular pay, occasional mass layoffs and the unsettling nature of many tasks, many taskers remain on the Outlier platform, hoping the AI future will eventually improve conditions. One said, "I have to be positive about AI because the alternative is not great."In response, a Scale AI spokesperson stated, "Outlier provides flexible, project‑based work with transparent pay. Contributors choose when and how they participate, and we regularly hear from highly skilled contributors who value the flexibility and opportunity to apply their expertise on the platform."