The lawsuit, filed in Santa Clara County Superior Court on behalf of California residents, accuses Meta of knowingly tolerating scam advertising across its platforms.

The county is seeking restitution, civil penalties and a court order barring Meta from engaging in alleged unfair business practices.

The complaint cites leaked internal documents first reported by Reuters, which allegedly showed Meta generated up to $7bn annually from “high-risk” advertisements displaying obvious signs of fraud.

According to the filing, Meta failed to carry out a broad crackdown on scam advertisers and instead introduced “guardrails” designed to limit anti-fraud measures if they threatened revenue.

The lawsuit also alleges the company enabled intermediaries to sell protected advertising accounts and targeted scam advertisements at users who had previously engaged with similar content.

“The scale of Meta’s misconduct has reached an extraordinary level, and it needs to stop,” Santa Clara county counsel Tony LoPresti told Reuters.

Meta has previously denied deliberately accepting scam advertisements to protect its revenue stream. A company spokesman said last year: “We aggressively fight fraud and scams because people on our platforms don’t want this content, legitimate advertisers don’t want it and we don’t want it either.”