Siding with Facebook, a federal judge has thrown out a lawsuit by the Arkansas marketing company dotStrategy, which alleged it was charged for clicks originating from “fake”
accounts.

The ruling, issued Friday by U.S. District Court Judge William Alsup in the Northern District of California, is “without prejudice” — meaning dotStrategy can beef up its
complaint and bring it again.

dotStrategy, which operates the “.buzz” domain registry, alleged in a class-action complaint that it was charged for clicks from 13 fake accounts
between 2013 and 2018. The company said Facebook ultimately deleted eight of those accounts, but failed to issue a refund.

dotStrategy claimed that Facebook violated a California business law
regarding unlawful, unfair or fraudulent conduct. The claim centered on allegations that Facebook represented to advertisers that they wouldn’t be charged for invalid clicks.

Facebook urged
Alsup to dismiss the case for several reasons, including that dotStrategy didn’t spell out in its complaint whether it relied on any particular promises by Facebook.

Alsup agreed with Facebook
on that point.

“The main statement that plaintiff complains of … concerns Facebook’s alleged statement to advertisers that they would ‘not be charged for clicks that are
determined to be invalid,’” Alsup wrote in an opinion issued Friday. “Crucially, the complaint fails to allege that plaintiff relied on this alleged misrepresentation, which is the crux of
plaintiff’s entire case, as presented during oral argument. This shortfall in pleading is fatal.”

Facebook had also argued that its contract with advertisers required them to
notify the company of disputes within 30 days. The social media company said dotStrategy failed to meet that 30-day deadline.

But Alsup said in his ruling that the 30-day deadline was
unreasonable and therefore unenforceable.

“In short, allowing plaintiff only thirty days to thoroughly investigate every single Facebook account that clicked its ads was unreasonable
— though perhaps, as Facebook contends, remotely possible,” he wrote. “Accordingly, under the circumstances alleged here, this order finds that Facebook’s waiver provision is
unenforceable.”

Alsup gave dotStrategy until September 11 to amend its allegations.

A different federal judge recently allowed dotStrategy to pursue similar claims against
Twitter.