CFPB Investigates Meta's Use of Consumer Financial Data in Advertising Practices

The Consumer Financial Protection Bureau (CFPB) has put Meta Platforms, Inc. on notice. The federal agency is considering legal action against the social media giant over allegations that it improperly obtained consumers’ financial data from third parties and funneled that information into its highly profitable targeted advertising operations.

The details of this investigation surfaced in a filing Meta submitted to the Securities and Exchange Commission (SEC) on Thursday, revealing the growing scrutiny the company faces. Known for platforms like Facebook and Instagram, Meta is already grappling with mounting pressure from regulators and state attorneys general, who have been raising concerns about its privacy practices and its influence on young users.

A Closer Look at the Allegations

The CFPB’s notification highlights some serious claims regarding how Meta handles consumer financial information. The agency is particularly focused on how this data is used in advertising financial products and services, though the filing did not specify whether these practices apply to Facebook, Instagram, or both.

While a spokesperson for Meta declined to comment directly on the investigation, the company maintains that it disagrees with the allegations, insisting that any enforcement action would be unwarranted. The CFPB has also stayed mum about the ongoing inquiry, adding an air of mystery to the situation.

In the SEC filing, Meta revealed that on September 18, the CFPB informed them of its inquiry into whether the company’s actions may violate the Consumer Financial Protection Act. This legislation aims to protect consumers from unfair and deceptive financial practices, and if the CFPB finds sufficient grounds, it could file a lawsuit seeking financial penalties and other forms of relief.

Meta’s Financial Triumph Amidst Turbulence

This investigation comes at a time when Meta is celebrating a financial milestone. The company recently reported an impressive $41 billion in revenue for the third quarter of 2024—a 19% jump from the previous year. A hefty chunk of this revenue flows from its targeted advertising business, which has been under intense scrutiny from both the Federal Trade Commission (FTC) and European regulators for allegedly misusing user data and breaching privacy rights.

It’s important to note that this isn’t the first time Meta has found itself in hot water over privacy issues. In 2019, the company agreed to pay a staggering $5 billion to the FTC to settle allegations stemming from the infamous Cambridge Analytica scandal. That controversy exposed how Meta had shared user data with a political consulting firm, raising serious questions about user privacy. More recently, the European Union slapped Meta with a $1.3 billion fine for improperly transferring user data from Europe to the U.S.

As the CFPB's investigation continues, the stakes are high for Meta. The outcome could reshape the way tech companies handle consumer data, particularly in the world of targeted advertising. This situation is a clear signal that regulators are serious about holding companies accountable for how they protect sensitive consumer information.

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