California’s Santa Clara County filed a lawsuit against Meta Platforms Inc. [NASDAQ: META] on Monday, accusing the social media giant of knowingly facilitating and profiting from billions of fraudulent advertisements on Facebook and Instagram in violation of California’s false advertising and unfair business practices laws.

The complaint was filed in Santa Clara County Superior Court on behalf of all California residents, by County Counsel Tony LoPresti with the assistance of three outside law firms: Bernstein Litowitz Berger & Grossmann, Renne Public Law Group, and Bishop Partnoy.

LoPresti alleges Meta earns as much as $7 billion in annual revenue from so-called “high-risk” scam advertisements that show clear signs of being fraudulent, citing leaked internal documents first reported by Reuters last year as the primary evidence base for the case.

The lawsuit accuses Meta of specifically targeting seniors and families with scam ads, tracking which users had previously clicked on similar fraudulent content, and then serving them additional scam offerings through its algorithmic recommendation systems.

Rather than cracking down on fraudulent advertisers, the county alleges, Meta largely tolerated the misconduct and even established internal “guardrails” designed to block scam reduction efforts if they cost the company too much money in lost advertising revenue.

The complaint further alleges that Meta allowed middlemen to sell accounts used to place advertisements that were deliberately shielded against enforcement actions, and that the company’s own generative AI tools often assisted unethical marketers in producing more convincing scam ads.

The lawsuit also claims Meta could adjust the volume of scam ads flowing through its platforms to smooth its earnings or hit specific revenue targets, a detail drawn directly from internal company filings cited in the complaint.

The county is seeking financial restitution for California consumers who lost money as a result of the ads, civil penalties against the company, and a court order requiring Meta to fundamentally change its advertising practices going forward.

A Meta spokesperson disputed the allegations, stating the company removed over 159 million scam ads last year alone, has launched new tools to protect users, and has partnered with law enforcement globally to disrupt fraudulent operations, and that the company will fight the lawsuit.

The case follows a similar complaint filed weeks earlier by the Consumer Federation of America, adding to growing legal pressure on Meta over its handling of fraudulent and harmful content across its platforms.