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Meta Platforms and Instagram are facing a proposed class action from three users who say fraudulent Facebook and Instagram ads led them into crypto investment scams. The lawsuit alleges Meta’s advertising and AI tools helped create, distribute and target deceptive ads that directed users to WhatsApp groups where scammers solicited money and cryptocurrency.
Three Users Sue Meta Over Scam Ads
Niroshini Dassanayake, Kenneth Gugel and Andrew Svoboda filed the complaint on Sept. 3 in the U.S. District Court for the Northern District of California. The plaintiffs allege Facebook or Instagram ads directed them to investment groups on WhatsApp. Scammers then allegedly instructed them to transfer money or cryptocurrency to designated wallets.
According to the complaint, users were shown account balances suggesting their investments had grown but later could not withdraw the displayed funds. The case, Dassanayake et al. v. Meta Platforms, Inc. et al. remain at an early stage. The proposed class has not been certified.
Lawsuit Targets Meta’s Advertising Tools
The plaintiffs allege Meta did more than host third-party advertisements. They claim its advertising technology and generative AI tools helped create, place and target deceptive investment promotions.
The lawsuit alleges those systems could generate multiple ad variations and optimize them for engagement. Those claims have not been established by the court.
Meta Says It Removes Millions of Scam Ads
Meta says it uses automated systems, enforcement teams and law-enforcement partnerships to fight scams. The company said in March that it removed well over 159 million scam ads during 2025, with 92% removed before users reported them. Meta said:
“We aggressively combat scam activity to protect people and businesses.”
Earlier Cases Tested Meta’s Legal Protection
Federal courts have previously considered when Meta can be held responsible for fraudulent advertising and scam content. In August, a Northern California judge dismissed claims involving fraudulent stock promotions, finding that Section 230 protected Meta from several allegations because key impersonation content was created by scammers in WhatsApp and Messenger groups.
In another case, a court allowed some claims alleging that Meta’s AI tools helped generate deceptive ads to proceed past an earlier dismissal stage. The differing outcomes suggest Meta’s potential liability may depend in part on what content caused the alleged harm and how directly its tools contributed to creating it. No ruling has yet been issued in the new crypto-scam case.
