The U.S. Virgin Islands has launched a legal challenge against Meta Platforms, accusing the social media company of knowingly allowing fraudulent advertisements to flourish across Facebook and Instagram while failing to protect users from harm. The lawsuit, filed by the territory’s attorney general, alleges that Meta placed profits ahead of safety, exposing users—including children—to scams and misleading content in pursuit of higher engagement and advertising revenue.
The complaint was filed in the Superior Court of the Virgin Islands on St. Croix and seeks penalties under local consumer protection laws. According to the lawsuit, Meta’s business practices allowed financial fraud to spread across its platforms even as the company publicly claimed to prioritize user safety.
“Meta knowingly and intentionally exposes its users to fraud and harm. It does so to maximize user engagement and, in turn, its revenue,” the lawsuit states.
Attorney General Gordon C. Rhea described the action as a significant step in holding large technology firms accountable, calling it the first lawsuit brought by an attorney general specifically targeting the scale of scams allegedly operating on Meta’s platforms.
Internal Estimates Highlight Scale of Alleged Problem
At the center of the lawsuit is a Reuters investigation published last month that detailed internal projections made by Meta. According to the report, the company estimated that around 10% of its revenue in 2024—roughly $16 billion—would come from advertising linked to scams, illegal gambling operations, and banned products.
The Reuters findings were based on internal company documents outlining Meta’s approach to policing advertisers. Those documents suggested that the company does not block suspected scam advertisers unless its automated systems reach a 95% confidence threshold that wrongdoing is occurring.
The Virgin Islands lawsuit repeatedly cites this reporting, arguing that the internal estimates demonstrate Meta’s awareness of the scale of fraudulent activity tied to its advertising business. Despite this knowledge, the complaint alleges, the company continued to allow such ads to run.
According to the lawsuit, Meta’s reliance on high confidence thresholds before taking enforcement action enables scam advertisements to circulate widely, increasing the likelihood that users will be misled or financially harmed.
Political Pressure Follows Reuters Report
The Reuters investigation did not only attract legal attention at the territorial level. In the weeks following its publication, two U.S. senators publicly urged federal regulators to investigate the matter further.
The lawmakers called on the Securities and Exchange Commission and the Federal Trade Commission to examine Meta’s advertising practices and “pursue vigorous enforcement action where appropriate.” Their concerns centered on whether Meta had adequately disclosed risks related to its advertising revenue and whether consumers were being sufficiently protected from fraud.
While no federal enforcement action has been announced so far, the lawsuit from the Virgin Islands adds to a broader wave of scrutiny facing Meta over how it manages advertising and platform safety.
Claims of Misleading Safety Messaging
In addition to allegations about scam advertising, the lawsuit accuses Meta of misrepresenting the effectiveness of its safety measures to users, parents, lawmakers, and regulators. The complaint argues that Meta frequently promotes its platforms as safe environments while failing to consistently enforce the policies it claims are in place.
“Meta repeatedly touts the ‘safety’ of its platforms to its users, parents, regulators, and Congress,” the lawsuit states. “Meta consistently, and intentionally, fails to implement the policies it writes.”
The lawsuit asserts that these alleged failures affect both adults and minors and span Meta’s major platforms, including Facebook and Instagram. Attorney General Rhea said the legal action is intended to address what he described as systemic enforcement gaps and a lack of transparency.
Meta Pushes Back Against Allegations
Meta has rejected the claims made in the lawsuit, describing them as unfounded. Company spokesman Andy Stone pointed to previous public statements in which Meta denied failing to protect users from scams or harmful content.
“We aggressively fight fraud and scams because people on our platforms don’t want this content, legitimate advertisers don’t want it and we don’t want it either,” Stone said.
He added that Meta has seen significant progress in recent months, stating that scam reports from users have dropped by half over the past 18 months.
Stone also dismissed allegations that the company has failed to protect younger users.
“We strongly disagree with these allegations and are confident the evidence will show our longstanding commitment to supporting young people,” he said.
Ongoing Concerns Over Child Safety
The lawsuit arrives amid renewed scrutiny of Meta’s approach to child and teen safety. In August, Reuters reported on an internal Meta document that outlined chatbot behavior guidelines allowing the company’s artificial intelligence tools to “engage a child in conversations that are romantic or sensual.”
The report drew public backlash and intensified concerns about how emerging technologies are deployed on platforms used by minors. In response, Meta said it removed the portions of the guidelines that permitted chatbots to flirt or engage in romantic roleplay with children.
The Virgin Islands lawsuit references broader concerns about how Meta balances user safety with product development and engagement goals, particularly when children are involved.
Broader Legal Implications for Big Tech
The case adds to a growing list of legal challenges facing Meta globally, as regulators and prosecutors increasingly examine how major technology companies oversee advertising, moderate content, and protect vulnerable users.
Although the Virgin Islands is a U.S. territory, its consumer protection laws allow it to seek civil penalties against companies whose business practices affect local residents. The lawsuit does not specify the amount of penalties sought but asks the court to impose fines and require changes to Meta’s practices.
Legal analysts say the case could have wider implications if it succeeds, potentially encouraging other states or territories to pursue similar actions against large social media platforms.
