Advertisers who used Facebook and Instagram to promote their ads have filed a $7 billion class-action lawsuit at the San Francisco court against Meta.
The plaintiffs claim that they were unfairly overcharged for showing ads on Facebook and Instagram. According to them, the corporation exaggerated ad viewing data by 400%. As a result, they were forced to pay inflated amounts to place ads on Meta’s platforms.
The advertisers suing Meta claim that the Potential Reach metric used by the company to determine the cost of advertising is based on the total number of social media accounts, but not the number of individual users. This approach is abusive because it includes bots and fake accounts, resulting in advertisers paying more money to have their ads shown to non-existent users.
Meta in turn denied the allegations, saying that the price charged to advertisers is based on performance metrics – not Potential Reach, as alleged in the lawsuit.
“These allegations are baseless, and we will defend ourselves vigorously,” commented Meta’s spokesman.
Jeffrey Graber, a partner at Cohen Milstein and a leading attorney representing advertisers, said:
“We look forward to continuing to litigate this case on behalf of Meta’s advertising clients and presenting evidence to the jury that Meta knew about Potential Reach’s overcharges and refused to solve the problem because it did not want to lose revenue. The lawsuit represents a large number of advertisers who overpaid to place their ads on Instagram and Facebook. If the case goes to court, more affected advertisers will seek compensation.”
It’s worth noting that Meta’s former advertisers DZ Reserve and Cain Maxwell initiated the case in 2018. After the complaint was filed, DZ Reserve permanently ended its partnership with Meta. In 2024, the 9th U.S. Circuit Court of Appeals in San Francisco ruled that the company could sue Meta for monetary damages.
As for the outcome of the case, it will either go to court or be settled as part of a settlement agreement that provides monetary compensation for the plaintiffs.
- Court documents: https://cdn.ca9.uscourts.gov/datastore/opinions/2024/03/21/22-15916.pdf
- For more information, visit Reuters.com.
