Facebook Fails to Nix Advertisers’ Fraud Claims

On April 25, 2019, the judge in the Facebook Video Advertising Metrics Lawsuit issued an order saying that Facebook lost on its fourth motion to dismiss. The order denied Facebook’s attempt to get rid of the plaintiffs’ claim that Facebook committed fraud.

The Plaintiffs filed a Fourth Amended Complaint in November of 2018 to add a claim for fraud and punitive damages. According to the complaint, Facebook publicly professed that its inflated metrics were the result of a good-faith mistake, and that as soon as it discovered the error it fixed it.  The complaint says, however, that Plaintiffs learned that Facebook engineers knew the company was using the wrong denominator to calculate average viewership, and that Facebook took no action for over a year, even as advertisers reported aberrant results caused by Facebook’s faulty formula.

As a result, Plaintiffs alleged that Facebook either knew that it was reporting drastically inflated metrics or, at a minimum, acted with reckless disregard for the truth. Facebook did not contest this in its fourth motion to dismiss.  Instead, Facebook claimed the Plaintiffs did not adequately allege that they relied on Facebook’s inflated metrics.

The judge held that Facebook waived that argument by failing to raise it in either of its prior two motions to dismiss. The decision represents another victory for advertisers in their efforts to get Facebook to compensate them for a metrics error that overstated the average time users were watching video ads by up to 900%, according to the complaint.

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