March 21 (Reuters) - A divided U.S. appeals court said

Meta Platforms ( META ) must face a class action by advertisers

that accused the Facebook and Instagram owner of overcharging

them by fraudulently inflating the number of people their ads

might reach.

In a 2-1 decision, the 9th U.S. Circuit Court of Appeals in

San Francisco said advertisers could sue for damages as a group

over Meta's claims about the "potential reach" of their ads.

Advertisers said the metric measured the number social media

accounts, not the lower number of actual people, and inflated

the number of potential viewers by as much as 400%.

The San Francisco-based appeals court also decertified a

separate class seeking injunctive relief, meaning the

advertisers cannot sue as a group, because it wasn't clear that

the main plaintiff had legal standing to sue.

A dissenting judge would have decertified both classes.

Meta and its lawyers did not immediately respond to requests

for comment.

The Menlo Park, California-based company has said ads

generate "substantially all" of its revenue, which totaled

$134.9 billion in 2023. Net income was $39.1 billion.

Class actions afford potentially greater recoveries at lower

cost than if plaintiffs are forced to sue individually.

Circuit Judge Sidney Thomas wrote for Thursday's majority

that because Meta provided the same alleged misrepresentation

about potential reach, advertisers could try to prove that their

alleged damages stemmed from a "common course of conduct."

The class covers potentially millions of individuals and

businesses that have paid for ads on Facebook and Instagram

since Aug. 15, 2014.

Their lawsuit included a claim that senior executives knew

that duplicate and fake accounts, including from bots, inflated

the "potential reach" metric, but took steps to cover it up.

Circuit Judge Danielle Forrest, in a partial dissent, said

she would decertify the damages class because of individualized

questions about what advertisers understood about what Meta was

telling them before they bought ads.

A lawyer for the advertisers had no immediate comment.

The case is DZ Reserve et al v Meta Platforms Inc ( META ), 9th U.S.

Circuit Court of Appeals, No. 22-15916.