German court rules Meta liable for scam ads on Facebook and Instagram

A German court has ruled that Meta is responsible for fake investment ads posted by others on Facebook and Instagram.

The court ordered Meta to remove the ads and pay damages, Reuters reported. The Frankfurt Regional Court’s decision is not final and can be appealed.

Finanzfluss, a German personal finance platform, and its co-founder Thomas Kehl filed the lawsuit. Scammers used the company’s trademarked logo and Kehl’s photo without permission in posts promoting investments the court called allegedly fraudulent.

The court said Finanzfluss reported nearly 260 similar violations to Meta in August 2024 alone. Some of these posts stayed online for as long as 62 days.

Meta argued it should not be responsible for content it did not know about, which is a defense allowed for hosting services under the EU’s Digital Services Act.

The court disagreed, saying Meta controls what users see through its algorithms and advertising practices. Meta decides when and in what order ads appear, unlike a basic chronological feed.

The judges based their decision on a June ruling by the EU’s top court. That earlier ruling said a platform can lose its hosting protection if its algorithm, working in the operator’s interest, decides which content is shown and in what order.

Besides removing the ads and paying damages, Meta must also stop distributing the fake ads, look for similar copies after being notified, and tell the claimants about the ads and the money they made, according to German media. The amount of damages has not been set yet.

“We respectfully disagree with this decision and are considering next steps,” a Meta spokesperson said.

The spokesperson also said the company has taken strong action against scam ads, including proactively identifying them and removing reported content.

This ruling increases legal pressure on Meta over scam ads in Europe. In March, a Warsaw appeals court found that Meta is an active participant in advertising, not just a passive host.

Last month, Poland asked the European Commission to fine the company €250 million under the DSA.

In the US, Meta is also facing lawsuits over scam ads. Last year, Reuters reported that internal documents showed about 10% of Meta’s 2024 revenue, or around $16 billion, would come from ads for scams and banned goods.