German court rules Meta liable for scam ads on Facebook and Instagram

A Frankfurt court has ruled that Meta is liable for fraudulent investment advertisements posted by third parties on Facebook and Instagram, in a decision that tests how far the EU's liability shield for hosting services extends.

What the court decided

The Frankfurt Regional Court ordered Meta to remove the ads and pay damages to Finanzfluss, a German personal finance platform, and its co-founder Thomas Kehl, Reuters reported. The ruling is not final and can be appealed. In the judges' view, Meta's ranking algorithms and advertising auctions make the company more than a passive host, so it cannot rely on the protection that the EU's Digital Services Act (DSA) grants to hosting providers.

Scammers used Finanzfluss's trademarked logo and Kehl's photograph without permission in posts promoting investments the court described as allegedly fraudulent.

Why the hosting defence failed

Meta argued it should not be responsible for content it did not know about, the defence the DSA allows hosting services. The court rejected that argument, saying Meta itself decides when and in what order ads appear through its algorithms and advertising practices, unlike a basic chronological feed. According to the judges, Finanzfluss reported nearly 260 similar violations to Meta in August 2024 alone, and some posts stayed online for as long as 62 days.

The decision rests on a June ruling by the Court of Justice of the European Union, which held that a platform can lose its hosting protection when an algorithm operating in the operator's interest determines which content is shown and in what order.

Obligations beyond damages

Beyond removing the ads and paying compensation, Meta must stop distributing the fake advertisements, search for similar copies after being notified, and tell the claimants about the ads and the revenue they generated, according to German media reports. The amount of damages has not yet been set.

"We respectfully disagree with this decision and are considering next steps," a Meta spokesperson said, adding that the company proactively identifies scam ads and removes reported content.

Mounting pressure in Europe and the US

The ruling adds to legal pressure on Meta over scam advertising in Europe. In March, a Warsaw appeals court found that Meta is an active participant in advertising rather than a passive host, and last month Poland asked the European Commission to fine the company €250 million under the DSA. In the United States, Meta also faces lawsuits over scam ads; Reuters reported last year that internal documents showed roughly 10% of Meta's 2024 revenue, around $16 billion, would come from advertising for scams and banned goods.