Meta's AI Practices Hit With Lawsuit, Cease-and-Desist, and Privacy Fixes as Australia Drafts Algorithmic Feed Rules

Within days, Meta faced a Chicago biometric class action over AI training data, a San Francisco cease-and-desist over 350+ AI-generated child sexual abuse ads, and backlash over invasive Meta AI prompts, while Australia unveiled a draft Digital Duty of Care…

Four developments between September 9 and 11, 2026 converged on the governance of Meta's AI and algorithmic systems. On the regulatory front, Australia released draft legislation for a Digital Duty of Care including a 'My Feed, My Way' measure requiring platforms to let users over 16 switch off algorithmically curated feeds, obligations for digital services — social media, games, apps, and AI chatbots — to protect under-18s from harmful content and design features, non-compliance penalties up to AU$109.2 million (US$78.6 million), and new removal-notice powers for the eSafety Commissioner targeting nudify apps and sites; the bill is expected in Parliament before Christmas and follows Australia's under-16 social media ban and Meta's US settlement over teen feeds. In the US, San Francisco City Attorney David Chiu sent Meta a cease-and-desist over more than 350 ads, documented by the Tech Transparency Project, that used AI to turn images of minors — some of real people, including a European royal family member — into videos depicting sexual acts promoting AI nudify apps, reaching over 29,000 accounts across the EU, US, Australia, and India; Meta says it has removed all the ads, that most had fewer than 200 impressions with total spend under $5,000, and disputes the city attorney's jurisdiction. Separately, Meta said it 'missed the mark' and has fixed Meta AI suggested prompts after Instagram user Kalie Robins showed the chatbot asking 'Who is the child passenger?' and piecing together details about her daughters from her and relatives' posts, surfacing photos including one she says she deleted years ago; the assistant is embedded in Facebook, Instagram, WhatsApp, and Messenger. Finally, a proposed class action filed in federal court in Chicago alleges Meta extracted biometric data from Facebook and Instagram photos without notice or consent to build the unreleased NameTag face-recognition system for smart glasses — code found in a Meta glasses AI companion app downloaded more than 50 million times before its removal — and to train the generative models Emu and Muse Image; plaintiffs invoke Illinois' Biometric Information Privacy Act seeking $5,000 per intentional or $1,000 per negligent violation, with a class potentially numbering in the millions dating to September 2021. Meta calls the suit without merit, says it is not building a universal face database, and previously paid $650 million to settle an Illinois biometric class action in 2020 and $1.4 billion…

• Australia's draft Digital Duty of Care would require platforms to offer users over 16 a non-algorithmic feed choice and to protect under-18s across social media, games, apps, and AI chatbots, with penalties up to AU$109.2 million (US$78.6…
• The Australian proposal would give the eSafety Commissioner removal-notice powers for nudify apps and sites, and follows Australia's under-16 social media ban and Meta's US settlement over teen feeds.
• San Francisco City Attorney David Chiu's cease-and-desist demands Meta stop 'allowing' paid ads with AI-generated child sexual abuse content and respond within 28 days.
• Tech Transparency Project researchers found more than 350 such ads promoting AI nudify apps, reaching over 29,000 accounts across the EU, US, Australia, and India; some ads used images of real people, including a European royal family…
• Meta says all the ads have been removed, most had fewer than 200 impressions, total ad spend was under $5,000, and the ads ran outside the city attorney's jurisdiction.
• Meta said it 'missed the mark' and fixed Meta AI suggested prompts after user Kalie Robins showed the chatbot asking 'Who is the child passenger?' and compiling her children's ages and location details from her and relatives' posts,…
• Meta AI is embedded in Facebook, Instagram, WhatsApp, and Messenger; in July Meta pulled an Instagram AI deepfake feature after backlash.
• A proposed class action in federal court in Chicago alleges Meta harvested biometric data from Facebook and Instagram photos without consent to develop the unreleased NameTag face-recognition system for smart glasses and to train the Emu…