German court holds Meta liable for 'fraudulent' ads on Facebook, Instagram

A German court has ruled that US technology company Meta can be held legally liable for "fraudulent" advertisements published by third parties on Facebook and Instagram.

The Frankfurt Regional Court said Thursday that Meta must stop the publication and distribution of fake advertisements that unlawfully used the logo of a financial information portal and the name and images of its well-known founder.

The case was brought by a company operating an online portal offering comparison calculators, product reviews and consumer guidance on financial products, as well as its founder and managing director.

The portal has more than 600,000 followers on Instagram and around 29,000 on Facebook.

According to the court, unidentified users used the company’s registered logo and images of its founder to promote purported financial investments, directing users to external links in what appeared to be fraudulent schemes.

Several affected users subsequently contacted the plaintiffs.

The company reported nearly 260 violations to Meta in August 2024 alone, but identical or substantially similar advertisements continued to appear. Meta took up to 62 days to remove some of the content.

The court found that the advertisements seriously infringed the company’s corporate personality rights and the founder’s personal rights.

Meta exercises control through algorithms

The court rejected Meta’s argument that it could avoid liability under the EU’s Digital Services Act because it had no prior knowledge of the fraudulent content.

Referring to a recent ruling by the Court of Justice of the European Union, the judges said liability protections do not apply in the same way when a service provider exercises control over displayed content.

Meta determines the ranking and timing of advertisements through an automated auction process and controls the distribution of content in users’ feeds through algorithms, the court said.

Unlike platforms that offer purely chronological feeds, Meta therefore exercises control over the advertising content shown to users, it added.

The court ordered Meta to compensate the plaintiffs for future damages arising from the distribution of identical or similar fraudulent advertisements.

The company must also provide information about the advertisements and disclose the revenue it generated from them.