Alveena Ahmad
Advertisers on Facebook and Instagram brought a $7 billion class-action lawsuit against Meta in San Francisco.
According to them, the social media giant overstated ad viewership figures by up to 400%, forcing them to pay inflated premiums for ad placements.
Potential Reach metric:
Advertisers suing Meta claim that the company’s Potential Reach metric, which counts the total number of social media accounts instead of individual users, determines advertising costs. They argue that this strategy is problematic because it may involve the use of bots and false accounts, which would force advertisers to pay more for the placement of their ads on bots.
What Meta is expressing. The claims were refuted by Meta, who clarified that performance metrics—rather than the Potential Reach metric as stated in the lawsuit—determine the price that advertisers pay. A representative for Meta told AdWeek:
“We will vigorously defend ourselves, and these allegations are baseless.”
What the commercials have to say. Partner at Cohen Milstein and lead attorney for the advertisers, Geoffrey Graber, stated:
“We look forward to taking this case to trial on behalf of Meta’s advertising clients and proving to the jury that Meta was aware of its inflated Potential Reach but chose not to address the problem out of concern for its bottom line.”
Why it matters to us:
Millions of advertisers who might have overpaid to have their ads served on Facebook and Instagram are represented in this lawsuit. More impacted advertisers might come forward to seek compensation if this case goes to trial.
Legal specifics:
The lawsuit was started in 2018 by DZ Reserve and Cain Maxwell, two former Meta advertisers. DZ Reserve stopped doing business with Meta after the complaint was filed, and it’s unclear if Maxwell’s company is still in operation. In the year 2024, the 9th U.S. Circuit Court of Appeals in San Francisco made a decision allowing the company to sue Meta for money damages.
Next Actions:
Either a trial or a settlement involving monetary compensation for the plaintiffs will decide the case.
