Lawsuit Claims Facebook Misled Advertisers with Inflated ‘Potential Reach’ Numbers


According to a lawsuit filed last week, Facebook misled advertisers by claiming it had a far larger audience size in U.S. cities and states than it actually had.

The lawsuit, which was filed in U.S. District Court of Northern California by Danielle Singer, the owner of an aromatherapy fashionwear business in Kansas, claims Facebook inflated its “Potential Reach” number for how many users were targeted by an advertisement.

This, contends the lawsuit, amounts to misleading advertisers into purchasing more advertisements than they might otherwise need.

 
 

Singer alleges that Facebook’s estimated Potential Reach figures for the 18-to-34 age demographic in all 50 states exceeded the actual population of 18-to-34-year-olds who use Facebook across that demographic in the American market.

Singer additionally says that the lawsuit received testimony from former Facebook employees confirming the existence of inflation with one anonymous employee saying that Potential Reach number was “like a made-up PR number.”

“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,” reads the lawsuit.

 
 

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

The lawsuit additionally cites the Pew Research Center’s “Social Media Use 2018” study that polled 2,002 U.S. adults on their social media habits. It found that Sixty-eight percent of adults polled reported that they used Facebook, with three-quarters saying they checked Facebook on a daily basis.

Research conducted by the Video Advertising Bureau found that in every state Facebook claimed ads could reach more 18-34 year olds than what was reported by the U.S. Census Bureau. California had the largest disparity said VAB, with reported numbers by Facebook’s Potential Reach and U.S. Census data at 34 percent difference.

A Facebook spokesperson told the local media that “this suit is without merit and we plan to defend ourselves vigorously.”

The lawsuit seeks class-action status from users who purchased advertisements on Facebook since 2013.

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