The proposed legislation aims to hold digital platforms accountable for deceptive advertising as online scams continue to cost Americans billions of dollars each year.
Bipartisan Push to Stop Online Scam Ads
U.S. Senators Ruben Gallego and Bernie Moreno on Wednesday introduced a new bipartisan bill designed to curb fraudulent advertisements on social media and other digital platforms.
The legislation, known as the Safeguarding Consumers from Advertising Misconduct (SCAM) Act, would require online platforms to take “reasonable and effective steps” to ensure deceptive or misleading ads do not reach users. Lawmakers say predatory scam advertising has become a major threat, costing Americans billions of dollars annually.
Reuters Report Raises Concerns About Ad Oversight
The senators pointed to a November investigation by Reuters, which cited internal documents suggesting that Meta failed to adequately identify and block advertisements linked to fraudulent activities. These included illegal online gambling operations and the sale of counterfeit products.
According to the documents, users could be exposed to nearly 15 billion scam ads each day. The report also noted that by late 2024, Meta projected it could earn around $16 billion from scam-related advertising—approximately 10 percent of its total annual revenue.
Although Meta disputed the accuracy of those figures, calling them “rough and overly broad,” the disclosures intensified bipartisan pressure on regulators to examine the company’s advertising practices. Meta owns Facebook, Instagram, and WhatsApp.
Lawmakers Call for Greater Platform Accountability
“Scammers are using social media to steal Americans’ hard-earned money, and right now these platforms face very little accountability,” Gallego said. He emphasized that companies profiting from advertising have a responsibility to ensure the ads appearing on their platforms are legitimate.
Moreno echoed those concerns, saying the bill is essential to closing legal loopholes that allow fraudsters to profit. He warned that lawmakers cannot ignore business models that knowingly enable scams targeting the public.
What the SCAM Act Would Do
Under the proposed legislation, online platforms would be required to verify the identity of advertisers before allowing any paid advertisements to run. The bill would also require companies to provide users with improved tools to report suspected scams and deceptive ads.
In addition, the SCAM Act would strengthen enforcement authority for the Federal Trade Commission and state governments in cases involving violations of consumer protection laws.
Rising Losses From Online Scams
According to an FTC report, Americans lost more than $3 billion in 2024 to scams that originated online. Social media was cited as the most common point of contact for scams, surpassing phone calls, text messages, and emails in reported financial losses.
Industry Support for the Proposal
The bill has received backing from several financial industry organizations, including the American Bankers Association. Its president and CEO, Rob Nichols, described the legislation as “an important step forward” in the fight against fraud.
“Banks invest heavily in detecting and stopping fraud, but the most effective solution is preventing scams before they ever reach the banking system,” Nichols said. “The SCAM Act asks social media companies to put consumers first and take responsible action to remove scammers from their platforms.”
