German court rules Meta liable for fake ads on Facebook and Instagram, orders it to pay damages

Meta just lost a court fight that goes to the heart of one of social media’s most persistent problems: scammers paying to place fake investment ads in front of users. The Frankfurt Regional Court ruled that Meta can be held liable for fraudulent third-party advertisements appearing on Facebook and Instagram, ordering the company to stop their publication, pay damages, and disclose information about the ads and the revenue they generated.

The case was brought by Finanzfluss GmbH, the company behind the German financial education portal Finanzfluss, and co-founder Thomas Kehl. Fraudsters had used the company’s logo and Kehl’s image without permission in ads promoting investment offers. Finanzfluss reported nearly 260 violations to Meta in August 2024 alone, the court said. Some of the reported material took as long as 62 days to come down.

“Meta loses fake-profile lawsuit against German influencer. Criminals used fake profiles of Thomas Kehl—the creator of “Finanzfluss”—to promote supposed investment opportunities in a scam on Facebook and Instagram. Now, the influencer has won his case against the US social media giant in the court of first instance,” German Manager magazine reported.

The court found that the fake advertising violated the company’s rights and Kehl’s personal rights. Yet the most significant part of the ruling may be the reasoning the judges used to reject Meta’s defense.

The algorithm became part of the liability question

Meta argued that it could rely on liability protections under the European Union’s Digital Services Act, which can shield online services that lack knowledge of illegal material hosted on their systems. The Frankfurt court took a different view.

The judges said Meta is not acting as a passive host in the same way a service displaying a purely chronological feed might. Meta decides when and in what order ads appear, uses algorithms to distribute content, and runs an automated advertising auction. In the court’s view, those systems give Meta a degree of control over distribution that weakened its claim to the DSA’s liability protection.

That distinction could become the part of the case the broader technology industry watches most closely. Social platforms have spent years arguing that third parties create the offending content. The Frankfurt ruling focuses instead on what happens after content enters a platform whose software selects, ranks, targets, and monetizes what users see.

The court cited a June ruling from the European Court of Justice in reaching its conclusion.

Meta rejected the ruling.

“We respectfully disagree with this decision and are considering next steps,” a Meta spokesperson said in a statement, Reuters reported. The company said it had taken significant action against the material, including proactively detecting and removing reported content.

Meta has made fighting scams a larger part of its platform-safety push. The company says it uses AI, advertiser verification, and facial-recognition tools to identify fraudulent campaigns. The Frankfurt case raises a harder question for the company: how much responsibility comes with operating the machinery that decides which paid messages reach which users?

The financial consequences are still unclear. Meta has been ordered to provide information about the fraudulent ads and the revenue generated from them, which could help determine damages. The ruling, dated September 16, is not final, and Meta may appeal. The case is listed as 2-06 O 234/25.

For Facebook and Instagram, the case is bigger than a batch of fake investment ads. It tests where Europe may draw the line between hosting third-party content and actively shaping its distribution. If the ruling survives appeal, that line could matter far beyond Meta.