Facebook and Litigation: A Magnet for Legal Eagles

May 6, 2022

Facebook now called Meta is doing everything it can to maintain relevance with kids and attract advertisers. A large portion of Facebook’s net profits comes from advertising fees. Meta has not been entirely clear with its customers, because CNN Business explains in the story: “Facebook Advertisers Can Pursue Class Action Over Ad Rates” that the company lied about the ability of its “potential reach” tool.

San Francisco US District Judge James Donato ruled that millions of people and businesses that paid for Facebook ads and Instagram, a subsidiary, can sue as a group. Facebook’s fiasco started in pre-pandemic days:

“The lawsuit began in 2018, as DZ Reserve and other advertisers accused Facebook of inflating its advertising reach, by increasing the number of potential viewers by as much as 400%, and charging artificially high premiums for ad placements. They also said senior Facebook executives knew for years that the company’s “potential reach” metric was inflated by duplicate and fake accounts, yet did nothing about it and took steps to cover it up.”

Knowingly deceiving customers is a common business tactic among executives. They do not want to disappoint their investors, or lose face, or money. It is such a standard business tactic that many bigwigs do get away with it, but some are caught with hands so red that ghee would make a bull angry (along with their customers). Facebook argued that a class action lawsuit was not possible, because the litigants were too diverse. The litigants are large corporations and individuals with home businesses. Facebook claimed they would not know how to calculate images.

Judge Donato said it made more sense for Facebook’s irate customers to sue as a group, because “ ‘no reasonable person’ would sue Meta individually to recover at most a $32 price premium.”

Ticketmaster faced a similar scandal when they charged buyers absurd fees for tickets. The fees went directly into the pockets of the executives. Ticketmaster’s class-action lawsuit resulted in all plaintiffs reaching $3-4 Ticketmaster gift certificates for every ticket they bought. The gift certificates could not be combined and had expiration dates.

Big businesses should be held accountable for their actions, but the payoff is not always that great for the individual.

Whitney Grace, May 6, 2022


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