Victims allege Meta's AI-powered ad tools made it easier for scammers to reach them with crypto fraud ads. The lawsuit questions Meta's responsibility for ad content and user safety.
Meta is facing a class-action lawsuit that accuses the company of enabling crypto scams through its AI-powered ad systems on Facebook and Instagram. The plaintiffs claim Meta's technology not only let fraudulent ads spread, but also fine-tuned them to reach people most likely to fall for the schemes, leading to direct financial losses.
The case centers on three users: Niroshini Dassanayake from Florida, Kenneth Gugel from Georgia, and Andrew Svoboda from Illinois. Each says they were drawn in by misleading ads and then invited into WhatsApp groups, where scammers convinced them to send money or cryptocurrency. When they tried to withdraw their funds, they found their balances were fake and their deposits gone.
Plaintiffs allege that Meta's generative AI tools created hundreds of scam ad variations, specifically optimized to increase engagement and target vulnerable users.
- MediaPost
The lawsuit, filed in federal court in San Francisco, argues that Meta's generative AI tools made scam ads more effective by producing hundreds of versions designed to boost clicks and engagement. The plaintiffs say Meta either knew or should have known its algorithms were helping create and target false ads, especially toward users most at risk.
The complaint also takes aim at Meta's public statements about platform safety. The plaintiffs argue that Meta misleads users into thinking fraudulent ads are quickly removed, when in reality, the systems may be amplifying the very scams they claim to fight. According to a MediaPost report, the lawsuit specifically accuses Meta of creating a false impression that scam ads are swiftly taken down, while the actual removal process may fall short.
This isn't the first time Meta has faced legal action over scam ads. In an earlier case, plaintiffs said Facebook ads led them into a pump-and-dump scheme on WhatsApp, again with Meta's AI tools involved in creating fraudulent content. Meta tried to use Section 230 of the Communications Decency Act-which usually protects platforms from liability for third-party content-as a defense. But a judge found that if Meta's role in ad creation was as extensive as claimed, Section 230 might not apply. That case was dismissed for other reasons, with the court citing federal securities laws as taking precedence.
This lawsuit is part of a broader pattern: earlier complaints also accused Meta of enabling crypto pump-and-dump schemes through Facebook, Instagram, and WhatsApp, with AI tools allegedly used to generate deceptive content.
- MediaPost
For publishers, creators, and anyone who makes money from digital audiences, the stakes are high. If platforms like Meta are found liable for algorithmically optimized scam ads, the entire model of automated ad targeting and AI-driven content distribution could face new legal and regulatory challenges. The case also raises questions about the limits of Section 230 protections when platforms move from simply hosting content to actively shaping and targeting it.
With legal and regulatory pressure growing, Meta's approach to platform safety and ad quality is under close watch. The company's recent $17.1 billion settlement over teen social media use, as reported by Top Class Actions, shows that courts and regulators are increasingly willing to challenge the boundaries of platform immunity and push for real changes in business practices.
Meta's legal risk in this case goes beyond crypto scams. It raises broader questions about the company's use of AI to drive engagement and revenue, even when those tools can be misused by scammers. As platforms rely more on AI to boost ad performance, they face growing scrutiny over how those systems can be exploited for fraud. The outcome of this lawsuit could set a precedent for how much responsibility tech companies must take for the real-world impact of their algorithms-and whether the promise of automated scale is worth the risk of unchecked abuse.
Meta Platforms, which owns Facebook, Instagram, and WhatsApp, reported annual revenues of more than $130 billion in 2025, with most of that coming from advertising. Its AI-powered ad infrastructure serves billions of impressions every day, making it one of the most influential players in global digital advertising. As scrutiny increases, Meta's ability to balance growth with platform safety will remain a central challenge for the company and the industry as a whole.
