Meta discloses potential CFPB lawsuit following probe into advertising, disclosure practices

Meta received a notice from the CFPB on Sept. 18 that staff may recommend to Director Rohit Chopra that the agency take legal action against the company, alleging violations of the Consumer Financial Protection Act, including the “receipt and use for advertising of financial information from third parties through certain advertising tools” as well as “related user disclosures and controls,” the company said in a securities filing Thursday.

“We disagree with the claims staff is considering and believe an enforcement action is unwarranted, and have responded,” the filing stated, adding the result of the process is uncertain, but could result in the CFPB filing a lawsuit seeking financial penalties and equitable relief.

The disclosure signals heightened CFPB scrutiny as it expands its oversight on nonbank companies, including large participants in the market like global Big Tech companies. In November 2023, the CFPB proposed rulemaking to expand that oversight, with the agency penalizing Goldman Sachs and Apple last month $89 million over alleged Apple Card consumer violations.

In October 2021, the agency issued a series of orders to Amazon, Apple, Facebook, Google, PayPal, and Square asking questions meant to help it understand the risks to consumers posed by their products and business models. 

Meta’s recent filing also disclosed that the European Commission opened formal proceedings at the end of April to assess Facebook’s and Instagram’s compliance with certain requirements under the EU Digital Services Act.

The issues flagged by the commission included elections, content reporting and appeals, third-party access to data, political content recommendations; and potential deceptive advertising and disinformation, including the way the company identifies, assesses, and mitigates against certain systemic risks on Instagram and Facebook.