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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.

Internal Warnings and Slow Fixes

Internal documents cited in the complaint include PowerPoint slides in which Meta engineers reported pricing “that doesn’t make sense” and acknowledged, “we cannot explain the pricing.” When the problem was eventually traced back to the faulty code, Meta allegedly rolled out a fix to just 2% of advertisers at first, to avoid detection.

Kurt Runke, then-director of auction and delivery science at Facebook, reportedly estimated the revenue impact of the bug to be $1 billion annually. Over the four-year period, Iron Tribe claims advertisers were overcharged by roughly $4 billion.

Plaintiffs allege that Meta would never have disclosed the issue voluntarily, and that it only came to light after a targeted investigation involving former Meta employees.

Claims and Class Scope

The four-count complaint includes claims for:

• Violations of California’s Unfair Competition Law

• Breach of contract

• Breach of the implied covenant of good faith and fair dealing

• Unjust enrichment

Iron Tribe is seeking to represent a class of all Facebook advertisers charged during the affected period. The suit requests restitution, disgorgement of Meta’s alleged ill-gotten gains, attorney fees, and other appropriate relief.