Meta Loses Attempt to Dismiss Billionaire’s Crypto Scam Ad Lawsuit

Meta Loses Attempt to Dismiss Billionaire’s Crypto Scam Ad Lawsuit

A U.S. federal judge has denied Meta Platforms’ effort to dismiss a lawsuit filed by Australian billionaire Andrew Forrest, who claimed that Facebook ads used deep fakes of his image to promote fraudulent crypto schemes. California District Judge Casey Pitts ruled on June 17 that Forrest can re-file his lawsuit and attempt to demonstrate that Meta’s failure to prevent the scam ads constitutes negligence and a breach of its duty to operate in a “commercially reasonable manner.”

Meta had argued that Section 230 of the Communications Decency Act shielded it from liability as a publisher of third-party content, a defense previously rejected in a similar case involving YouTube and crypto scam ads. The law, which is nearly 30 years old, states that providers of “interactive computer services” cannot be treated as the publishers of information provided by another content provider. However, Judge Pitts found that Meta had not definitively proven that Section 230 offered it an “airtight affirmative defense” against Forrest’s claims.

Forrest told The Australian that this marks the first instance in U.S. civil court where a social media company has failed to use Section 230 immunity as a defense against civil liability for its advertising practices. He emphasized that the ruling allows him to pursue proving in court that Facebook should be responsible for preventing fraudulent ads on its platform.

The judge’s order allows Forrest to amend his lawsuit to argue that Meta misappropriated his name and likeness, not just the scammers who created the fake ads. Judge Pitts noted that Forrest’s claims that Meta profited more from ads using his likeness than from those that did not were sufficient to allege misappropriation to Meta’s advantage. Additionally, she found that Forrest plausibly alleged Meta had an active role in creating the problematic ads through its advertiser tools.

In April, Australian prosecutors dropped criminal charges against Meta in the country over the deep fake crypto scam ads, citing insufficient evidence. Forrest, the founder of Fortescue Metals Group, is estimated by Forbes to have a net worth of $16.6 billion.