Meta Faces Lawsuit Over Fake Crypto Ads Promoting Australian Billionaire
By Jonathan Stempel
A U.S. judge has ruled that Meta Platforms must face a lawsuit filed by Australian billionaire Andrew Forrest, who claims that scam Facebook ads used his likeness to promote fake cryptocurrency and other fraudulent investments.
U.S. District Judge Casey Pitts in San Jose, California, decided on Monday that Forrest can try to prove Meta's negligence in allowing these ads, arguing that Meta failed to operate in a "commercially reasonable manner." Forrest can also attempt to demonstrate that Meta misappropriated his name and likeness, not just the fraudsters behind the bogus ads.
"Dr. Forrest claims that Meta profited more from ads that included his likeness than it would have if the ads had not," Pitts wrote. "This is enough to adequately plead that the alleged misappropriation was to Meta’s advantage."
Meta's lawyers declined to comment on Tuesday. They had previously argued that Section 230 of the federal Communications Decency Act should protect them from liability as publishers of third-party content. However, the judge noted a factual dispute regarding whether Meta's ad systems were neutral tools that anyone could use or misuse, or whether the tools themselves contributed to the content of the ads.
Impact of the Ads
More than 1,000 scam ads appeared on Facebook in Australia between April and November 2023, resulting in millions of dollars in losses for victims. Forrest, who is the 62-year-old executive chairman of Fortescue Metals Group, is worth an estimated US$16.5 billion (AUD$24.8 billion), according to Forbes magazine.
In a statement, Forrest hailed the judge’s decision as groundbreaking, noting that it was the first time a social media company could not invoke Section 230 immunity in a U.S. civil case over its advertising business.
"This is a crucial strategic victory in the battle to hold Facebook accountable," Forrest said. He is seeking both compensatory and punitive damages.
Historical Background
In April, Australian prosecutors declined to pursue criminal charges that Forrest brought against Meta over the scam cryptocurrency ads in that country. Forrest had used Australian laws allowing individuals to criminally prosecute foreign companies upon receiving prosecutors' consent.
The case is Forrest v Facebook Inc et al, U.S. District Court, Northern District of California, No. 22-03699.
