Class Action Lawsuit Claims Meta Knowingly Facilitates Pump-And-Dump Scammers with Ads on Facebook, Instagram

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A proposed class action lawsuit claims that Meta turns a blind eye to stock scammers who buy ads on Facebook, Instagram and WhatsApp to promote pump-and-dump schemes designed to cheat consumers out of millions of dollars.

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The 35-page lawsuit contends that Meta accepts business from scammers who, after purchasing advertising space on Instagram, Facebook and WhatsApp, prey on unsuspecting users with the promise of life-changing investment opportunities. The suit accuses the social media giant of failing to implement technology, devote personnel and design processes to monitor, identify and prevent scam ads.

“Instead, Meta has invested billions into developing generative artificial intelligence tools that have only worsened the proliferation of fraudulent advertisements and their effectiveness by generating hundreds of variations of advertisements that are optimized to drive engagement by vulnerable users,” the lawsuit alleges.

According to the complaint, the majority of these investment opportunities are no more than fraudulent pump-and-dump schemes, in which scammers convince a large group of people to invest in a stock that ordinarily has little value—typically under the guise of anticipated growth or a looming business collaboration—and present it as a strategic opportunity for investment before selling the stocks off at an inflated price.

The lawsuit was filed in the wake of an April 2025 rug pull that reportedly cost Facebook and Instagram users over $500 million as a result of advertising that encouraged them to purchase shares of Jayud Global Logistics, a Chinese stock listed on NASDAQ as JYD. Reportedly, the scammers had first acquired 50 million shares of JYD stock in December 2024 at highly discounted prices and “pumped” the share price up to a high of nearly $8 per share before the “dump” phase of the scam commenced, the filing says.

Using personal data collected via Meta’s tracking technologies and artificial intelligence, pump-and-dump scammers curate uniquely targeted advertisements on Meta’s Ads Manager for users whose activity suggests an interest in investing, and often illegally rely on the unlicensed likeness of celebrities and well-known investors to convey trustworthiness.

Related Reading: Class Action Lawsuit Alleges Meta Allowed Stock Investment Scams to Advertise on Instagram, Facebook

Per the complaint, Facebook and Instagram users who clicked on these ads were added to groups on WhatsApp, another entity owned by Meta, wherein the scammers communicated with investors and pressured them into putting as much money as possible into the stock.

The plaintiffs lost hundreds of thousands of dollars after falling victim to the JYD scam, the complaint says.

“Meta’s advertising tools were the primary means through which the scheme was implemented, which led to Plaintiffs and other victims interacting with and being victimized by the scammers,” the lawsuit argues. “The JYD scammers could not have accomplished their scheme without Meta’s proprietary tools, data, and active assistance.”

The case further alleges that Meta has “long been aware” of scam ads on Facebook and Instagram due to lawsuits dating back as early as January 2018 that claimed Meta allowed scam ads that unlawfully used celebrity names and likenesses to proliferate on its platform.

Though Meta’s Community Standards page states that the company prohibits the promotion of risk-free and “get-rich-quick” investment schemes, the lawsuit claims that Meta does not hold itself accountable and, in recent years, has canned anti-scam initiatives that CEO Mark Zuckerberg believed to withhold “billions” from overall company revenue.

“[E]ven if Meta believes the advertiser is likely a scammer, it allows the advertiser to remain active, but charges higher ad rates—essentially allowing scammers to pay a premium for the privilege of targeting Facebook and Instagram users with scam ads,” the complaint alleges.

The Meta scam ads class action lawsuit seeks to represent all individuals who were lured into investing in JYD as a direct or indirect result of fraudulent ads on Facebook or Instagram between March 21, 2025 and April 2, 2025, and suffered losses as a result.

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