Rhode Island filed a state-court lawsuit in Providence Superior Court accusing Meta of tolerating and profiting from widespread scam advertising on Facebook, Instagram, and WhatsApp.

Meta disputed Reuters’ reporting, calling it selective and distorted, and said it aggressively fights fraud and scams while noting progress in anti-scam efforts.

The complaint claims Meta used targeted advertising and misrepresented its commitment to preventing fraud, contributing to roughly $16 billion in 2024 ad revenue from restricted or fraudulent ads.

Insurance implications loom as liability insurers question coverage for design-based and civil-penalty claims, with Delaware rulings suggesting insurers may not defend Meta in youth-harm cases; the landscape could shift who bears penalties and insurance.

The Rhode Island action mirrors a prior Santa Clara County suit and sits within a broader context, including an $18 billion multi-state settlement over youth-addiction design in social platforms.

The legal pressure adds to Meta’s financial strain from heavy capital spending, as the company raised its 2026 capex forecast to about $135 billion and its stock slid after disclosures.

The case fits a larger trend of state attorneys general pursuing consumer-protection actions against Meta, potentially influencing its ad business and regulatory exposure.

Separately, Meta faces a $25 billion privacy-related penalty in New Mexico, contributing to broader legal pressure alongside an earlier $18.59 billion potential settlement with 52 attorneys general over teen mental health claims.

New Mexico actions culminated in a separate $25 billion fine for deceiving users about privacy on Facebook.

Rhode Island Attorney General Peter F. Neronha and Meta’s spokesperson provided statements as the case developed.

For insurers, the interplay of scams and liability matters for potential underwriters and investors, given Meta’s high capital expenditure and rising default-risk indicators in related markets.

Rhode Island is set to receive between roughly $49.4 million and $64.5 million from the August settlement, per the attorney general’s office.