Meta Platforms is seeking to dismiss several class-action lawsuits brought by investors who claim they lost millions of dollars to stock scams advertised on Facebook and Instagram. The plaintiffs, including a Wisconsin retiree who reported losing $715,000, allege that Meta's AI-powered advertising tools helped scammers create and target fraudulent ads. These ads often featured deepfake celebrity endorsements to lure users into WhatsApp groups where they were pressured into "pump-and-dump" stock schemes.
Meta has argued that these cases should be dismissed based on the Securities Litigation Uniform Standards Act (SLUSA). This 1998 federal law bars state-law class actions that allege fraud "in connection with" the purchase or sale of securities. Meta contends that because the alleged damages resulted from stock purchases, the cases cannot proceed as general consumer-protection lawsuits. While the company previously cited Section 230 of the Communications Decency Act, which protects platforms from liability for user-generated content, judges have recently focused on the SLUSA defense.
U.S. District Judge William Orrick indicated during a July hearing in San Francisco that he is inclined to dismiss the investor claims for lack of jurisdiction. He noted he may follow a June ruling by U.S. District Judge Richard Seeborg, who dismissed a similar suit on the grounds that federal securities law precludes such class actions. The plaintiffs' attorney, Andrew Robertson, argued that this creates an inconsistent standard where Meta's liability depends on whether a scam involves a physical product or a security. The decision by Judge Seeborg is currently under appeal at the 9th U.S. Circuit Court of Appeals.