When connecting your Facebook Ads account, you will be prompted to accept Meta's Terms and Conditions for creating custom audiences.
It will look like this:
Still not working despite accepting the Terms?
If you have already accepted the terms and you are still unable to proceed with connecting a Pixel, it's very likely that you have accepted the Term under the incorrect account. Meta often defaults to your personal Facebook Ad account which can cause confusion.
To resolve this issue:
Go here and then toggle to your business account in the upper right corner.
Then go back to Fraud Blocker and you can officially select a Pixel to connect.