Lawsuit: Facebook Misled Advertisers with Inflated Audience Figures

A newly filed lawsuit alleges that Facebook misled advertisers by inflating the “potential reach” figures for ad campaigns — the total audience that views ads on the platform.

The East Bay Times reports that Facebook is facing a lawsuit which alleges that the website claimed to have far larger audience sizes in U.S. cities and states than it actually does. The lawsuit was filed by Danielle Singer, a Kansas-based aromatherapy fashionwear business owner who claims that the social media Masters of the Universe purposefully inflated it’s “potential reach” figures for a particular advertisement, leading advertisers to invest more money in Facebook’s advertising system believing that they were reaching more users.

Singer claims in her lawsuit that Facebook’s potential reach figures for users aged 18-34 in all 50 U.S. states actually exceeded the number of platform users in that demographic. The lawsuit also claims that their suspicions were confirmed by former Facebook employees who described the potential reach figures as “like a made-up PR number.”

The lawsuit states: “Facebook’s misrepresentation of the Potential Reach of its advertisements induced advertising purchasers, including Plaintiffs, to continue purchasing advertisements, because purchased believed that more people could potentially be reached by their advertisements than possibly could have been.”

A Facebook spokesperson told the East Bay Times that: “this suit is without merit and we plan to defend ourselves vigorously.” The lawsuit against Facebook was filed in the U.S. District Court of Northern California and is seeking class-action status to represent all those that purchased advertisements on Facebook from 2013 onwards. The two counts that Facebook was sued on are California’s Unfair Competition Law and a “quasi-contract claim for restitution.”

Singer herself spent approximately $14,000 on Facebook ads for her business, Therapy Threads. She then decided to look into Facebook’s potential reach estimations and do her own calculations on advertising reach. What Singer discovered was that in Chicago, for example, there were approximately 808,000 U.S. resident ages between 18 and 34 according to U.S. census data, but Facebook calculated the potential reach for Chicago residents at around 1.9 million.