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The attorney general of the U.S. Virgin Islands has filed a lawsuit against Meta Platforms, accusing the company of profiting from advertisements linked to scams and failing to adequately protect users, including children, on Facebook and Instagram.

The lawsuit, filed in the Superior Court of the Virgin Islands on St. Croix, alleges that Meta knowingly allowed ads for fraud, illegal gambling, and other harmful products to appear on its platforms in order to increase user engagement and revenue.

According to the complaint, Meta internally projected that a significant portion of its advertising revenue would come from ads associated with scams and prohibited activities. The lawsuit cites reporting that described internal company assessments suggesting such ads contributed billions of dollars annually.

Following those disclosures, two U.S. senators urged the Securities and Exchange Commission and the Federal Trade Commission to investigate whether Meta’s practices violated federal law.

The Virgin Islands lawsuit seeks civil penalties under local consumer protection statutes. Attorney General Gordon C. Rhea said the case represents the first action by a state or territorial attorney general directly addressing allegations of widespread fraud on Meta’s platforms.

The complaint also accuses Meta of misleading the public and regulators about its efforts to protect children and adult users. It alleges the company publicly promotes platform safety while failing to consistently enforce its own policies.

Meta denied the allegations. In a statement, company spokesperson Andy Stone said Meta actively works to combat scams and fraud, adding that reports of scam activity on its platforms have declined significantly over the past year and a half.

Stone also rejected claims that Meta has failed to protect younger users, saying the company remains committed to youth safety and compliance with applicable laws.

The lawsuit follows prior scrutiny of Meta’s internal policies related to artificial intelligence tools. In August, the company said it revised certain chatbot guidelines after concerns were raised about interactions involving minors.