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A major legal challenge is putting Meta back in the spotlight over how it polices scams on Facebook and Instagram, with a new lawsuit alleging the tech giant not only failed to protect users but may have profited from fraudulent advertising while presenting a misleading picture of safety.

Filed in Washington, D.C., superior court, the case claims Meta misled users about its efforts to stop scam ads and allowed harmful promotions to spread across its platforms.

Lawsuit Alleges Profit From Scam Ads Despite Known Risks

The Consumer Federation of America (CFA), a nonprofit advocacy group, alleges Meta failed to block ads that could pose a risk to users while charging those advertisers more to display their content.

"Meta has adopted policies and practices that it knows allow scam advertisements to proliferate on its platforms while simultaneously profiting off those ads at its users' expense," CFA states in the suit.

The complaint argues that this approach created a system where scam content could spread while generating revenue for the company.

Accusations of Downplaying Fraud and Creating False Safety

Beyond the advertising practices, the CFA accuses Meta of minimizing the scale of fraud occurring on its apps, which it says contributed to a misleading sense of security for users.

"As Americans lose more and more money to online scams, Meta has consistently chosen to prioritize profit over the safety of their users," Ben Winters, director of AI and data privacy at the CFA, said in a statement.

The group argues these actions violate a Washington, D.C., consumer protection law and is seeking damages as well as the recovery of what it describes as illegal profits earned through advertising.

Meta Pushes Back, Cites Aggressive Enforcement

Meta strongly rejects the allegations, saying the claims do not reflect its efforts to combat scams across its platforms.

A company spokesperson said CFA's allegations "misrepresent the reality of our work" and emphasized that Meta actively removes fraudulent content.

"Last year alone, we removed over 159 million scam ads, 92% of which we took down before anyone reported them, and took down 10.9 million accounts on Facebook and Instagram associated with criminal scam centers," the spokesperson told CBS News in an email.

The company also said it continues to invest in new technologies aimed at detecting and stopping securities investment scams and other fraudulent activity before it reaches users.

As the lawsuit moves forward, it raises renewed questions about the scale of online fraud on major social media platforms and how effectively tech companies are protecting users from increasingly sophisticated scam operations.