On Thursday, October 27, 2016, a class action complaint was filed in United States District Court in the Northern District of California against Facebook, Inc (“Facebook”). The complaint alleges that Facebook inflated the amount of views advertising on the social media site received and, therefore, individuals who purchased video ads were induced by fraudulent information.

What are Facebook’s video metrics?

The complaint alleges Facebook provided “video metrics” to give providing advertisers information such as video views, unique video views, average duration of the video view, and audience retention. The metrics were a means for advertisers to make informed decisions about their advertising purchases.

Specifically, one video metric, the average duration of video viewed, or the “durations metric,” purported to measure the average length of time consumers spent viewing the advertiser’s posted video advertisement.

Facebook admitted its video metric was inflated.

On or about September 23, 2016, Facebook admitted on its business page that it found an error in the way it calculated the duration metric. Although the metric should have reflected the total time spent watching a video divided by the total number of people who played the video, it reflected the total time spent watching a video divided by only the number of “views” of a video. A video was considered viewed when it was watched for three or more seconds. Facebook admitted to the Wall Street Journal that this calculation error meant the duration metric had been artificially inflated by 60%-80% for two years.

Why does Facebook’s miscalculation matter?

According to the complaint, advertisers used the Facebook duration metric to monitor how much time consumers were spending viewing their advertisements in order to determine the advertisement’s effectiveness. By misrepresenting the average time consumers spent watching posted advertising videos, Facebook induced advertisers to continue to purchase video advertisements based on the belief that the advertisements were more successful than they actually were. Because of the inflated data, advertisers purchased advertising they would not have otherwise purchased or purchased advertising at a higher rate than they would have otherwise spent.

Who may have been affected by Facebook’s miscalculation?

According to the complaint, anyone located in the United States who had an account with Facebook and purchased two or more video advertisements of 10 seconds or more in duration from May 4, 2014 to September 23, 2016 may have been affected.

What can those who may have been affected do?

The Kehoe Law Firm is ready to help.  Those who believe they have been injured by Facebook’s misrepresentations can speak to an attorney for a free, no-obligation consultation by calling Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, or sending an e-mail to [email protected].

Kehoe Law Firm, P.C. is a multidisciplinary, plaintiff–side law firm dedicated to protecting investors and consumers from corporate fraud, negligence, and other wrongdoing. Driven by a strong and principled sense of social responsibility and obtaining justice for the aggrieved, Kehoe Law Firm, P.C. represents plaintiffs seeking to recover investment losses resulting from securities fraud, breaches of fiduciary duty, corporate wrongdoing or malfeasance, those harmed by anticompetitive practices, and consumers victimized by fraud, false claims, deception or data breaches.  Together, the partners of the Kehoe Law Firm, P.C. have spent more than 30 years prosecuting precedent-setting securities and financial fraud cases in federal and state courts on behalf of institutional and individual clients.