CALIFORNIA — South Carolina-based Iron Tribe Fitness filed a proposed class action against Meta Platforms Inc. on Friday, accusing the tech giant of secretly overcharging Facebook advertisers by billions of dollars through a flawed ad bidding system that allegedly misled customers for years.
Filed in the U.S. District Court for the Northern District of California, the Meta Facebook ad auction lawsuit targets a since-replaced advertising auction system used by Facebook between 2013 and 2017, which allegedly inflated ad prices by incorporating the highest bidder’s price into the final cost — contrary to Meta’s claimed use of an industry-standard second-price auction.
Blended Auction System Allegedly Boosted Ad Revenue
According to the 22-page complaint, Meta’s auction system used a “blended price” model that considered both the highest and second-highest bids, causing advertisers to pay more than they should have. Plaintiffs argue that Meta never disclosed this system to advertisers, leading them to submit higher bids under false pretenses.
“By hiding the fact that the highest bids impacted the price advertisers paid, Facebook elicited higher bids… Then, Facebook secretly calculated and charged higher prices,” the suit states.
The flawed bidding model was allegedly the result of a single line of erroneous code introduced in a 2013 software update. While Facebook engineers noticed a spike in ad revenue immediately afterward, the issue went undetected — or uncorrected — for four years.
