Facebook is facing legal action over alleged bias in its housing and employment ads.
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The claim, brought by a group of Facebook users, alleges the platform's "ethnic affinity" option is racially biased.
The option is there to enable marketers to exclude certain demographics and target others.
Facebook said the lawsuit was "utterly without merit" and that it would defend itself "vigorously".
The lawsuit was filed in Northern California with the lead plaintiff named as Suzanne-Juliette Mobley, according to the Courthouse News Service. It also names up to 9,999 defendants as advertisers who allegedly "used Facebook's platform to discriminate based on race, gender, national origin and other protected attributes".
It claims that allowing advertisers to block users from seeing ads based on these groups is in violation of the Fair Housing Act and the Civil Rights Act.
The 14-page lawsuit adds that there is no option to exclude the demographic of "white or Caucasian Americans from the target audience".
Empowerment tool
Facebook told Courthouse News that the lawsuit was without merit.
A spokesman later told the BBC: "We are committed to providing people with quality ad experiences, which includes helping people see messages that are both relevant to the cultural communities they are interested in and have content that reflects or represents their communities - not just generic content that's targeted to mass audiences.
"We believe that multicultural advertising should be a tool for empowerment. We take a strong stand against advertisers misusing our platform: our policies prohibit using our targeting options to discriminate, and they require compliance with the law. We take prompt enforcement action when we determine that ads violate our policies."
Public interest website Pro Publica led an investigation into the claims last month, creating adverts for the housing market that excluded African Americans, Asian Americans and Hispanics.
When they showed the adverts to civil rights lawyer John Relman he concluded that they were "as blatant a violation of the federal Fair Housing Act as one can find".
In a blogpost, Facebook's head of multicultural, Christian Martinez said: "Living in the US, most of the advertising that I see in traditional media is targeted to people in the majority - people who don't look like me, who don't speak Spanish, and who may not share my experience.
"The experience of ads constantly reminding you that you're different from the majority is incredibly marginalising, and it's not right."
He added that companies offering "multicultural advertising options" allows people to find content that is relevant to them.
- BBC