Group of marketers sues Facebook alleging ad fraud

Facebook
CEO Mark Zuckerberg
AP Photo/Andrew
Harnik

• A group of marketers has filed a complaint against Facebook
  alleging the company knew about discrepancies in its video
  metrics for more than a year before reporting them to
  advertisers.
• The new filing, based off of 80,000 pages of internal
  documents, claims that in September 2016 Facebook only had two
  engineers dedicated to fixing measurement errors.
• Facebook has filed a motion to dismiss these claims and
  says claims of fraud are false.

A group of small advertisers is suing Facebook and claims the
social network knew about measurement miscalculations for a year
before they were reported.

The group dubs itself LLE One and includes Las Vegas-based social
media firm Crowd Siren and Social Media Models. The group filed a
lawsuit in California’s federal courts in 2016 and added a
complaint Tuesday claiming that internal records suggest
“Facebook’s action rises to the level of fraud.” The plaintiff’s
case is based off roughly 80,000 pages of internal records from
Facebook.

In response to the lawsuit, a Facebook spokeswoman said, “This
lawsuit is without merit and we’ve filed a motion to dismiss
these claims of fraud. Suggestions that we in any way tried to
hide this issue from our partners are false. We told our
customers about the error when we discovered it — and updated our
help center to explain the issue.”

The case stems from September 2016, when
a report from The Wall Street Journal found that Facebook had
miscalculated the time spent watching videos by 60% to 80%. The
report set off a stream of other metric miscalculations reported
by Facebook and changes to how metrics were handled at the
social-media company. Facebook also set up a
measurement council and began working with the Media
Ratings Council to complete an audit of its metrics. 

According to the lawsuit, the video metrics were actually
inflated by 150% to 900%. The lawsuit also alleges that Facebook
knew about the metric disparity in July 2015. 

“In an internal response to one such inquiry, a Facebook engineer
discussed the numerator/denominator mismatch: ‘I remember
[another Facebook engineer] mentioned when computing the average,
we only consider views greater than three seconds, but use the
total watch time (including those under three [seconds]),'” the
lawsuit says.

Marketers claim that Facebook knew about the metric mistakes
ahead of time

The lawsuit claims that, in June 2016, a Facebook engineer
followed up to a 2015 complaint from advertisers about the
average percent of video viewed. The engineer wrote that there
“was no progress on the task for a year,” and continued to report
the metric for several months while using a “no PR strategy” that
avoided drawing attention to the error, according to the suit.

LLE One also alleges that internal documents found that Facebook
had never performed a full audit of its video metrics prior to
September 2016 and that the video insights team — which was
responsible for investigating and fixing errors — only had two
engineers dedicated to fixing errors.