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.

The complaint alleges 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.

Rhode Island seeks civil penalties, restitution to consumers, disgorgement of ill-gotten gains, injunctive relief, and potentially a monitor, receiver, or auditor to oversee Meta’s ad practices.

For insurers, the scams-and-liability dynamic matters as both potential underwriters and investors, given high capital expenditures and rising default-risk signals tied to Meta and AI hardware equities.

Meta’s financial strain is evident as the company lifts its 2026 capex forecast to about $135 billion, with stock sliding around 8% in a single session after the disclosure.

The Rhode Island action mirrors a prior suit by Santa Clara County and comes within a broader context of settlements and actions, including an $18 billion multi-state youth-addiction settlement against social platforms in August.

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

The suit is part of a trend of state AGs pursuing consumer-protection actions against Meta, potentially shaping Meta’s ad business and regulatory exposure.

Separately, Meta faces a $25 billion privacy penalty in New Mexico and is positioned for an $18.59 billion potential settlement with 52 attorneys general over teen mental health claims.

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

The suit cites scams impersonating public figures and trusted institutions, including fake Bank of America executives promoting scam stock trades via WhatsApp, and references external investigations like the Center for Countering Digital Hate.

Rhode Island is slated to receive between $49.4 million and $64.5 million from the August settlement.