Two U.S. senators have unveiled a bipartisan legislative proposal aimed at curbing fraudulent advertising on social media. The measure, called the Safeguarding Consumers from Advertising Misconduct Act - or the SCAM Act - would require social media platforms to take "reasonable steps" to prevent scam ads from running, and it would expose platforms to enforcement actions by the Federal Trade Commission as well as civil litigation by state attorneys general if they fail to comply.
The bill was introduced by Senators Ruben Gallego and Bernie Moreno. In statements accompanying the unveiling, Senator Moreno, a Republican from Ohio, said, "We can't sit by while social media companies have business models that knowingly enable scams that target the American people." Senator Gallego, a Democrat from Arizona, added, "If a company is making money from running ads on their site, it has a responsibility to make sure those ads aren't fraudulent."
A press release accompanying the bill cites earlier reporting from last November that cited internal company documents showing one major social media company expected that roughly 10% of its 2024 revenue - about $16 billion - would come from ads for scams and other illicit products. Following those disclosures, two other U.S. senators asked the heads of the FTC and the Securities and Exchange Commission to open probes into illicit advertising on that company's platforms.
The company named in those internal documents has disputed the characterization of its ad revenue, saying its internal statistics overstated the share of revenue tied to scams and ads that violated its own safety rules. A company spokesman said the firm "aggressively fight[s] fraud and scams because people on our platforms don't want this content, legitimate advertisers don't want it and we don't want it either."
Key provisions of the SCAM Act require platforms to verify government-issued identification for advertisers or to confirm the "legal existence" of businesses placing ads. The bill would also obligate platforms to promptly review and act on scam reports submitted by users or government entities. If platforms fail to take these steps, the legislation treats such failures as violations of the FTC's ban on unfair or deceptive business practices, and it authorizes state attorneys general to bring civil suits alleging non-compliance.
The bill's text asserts that some online platforms "have abandoned tighter advertiser verification processes to avoid driving away profits from advertisers," and it states that online platforms have become major conduits for online scams and other digital advertising-related fraud. The legislation has attracted endorsements from groups including the American Bankers Association and consumer organizations such as the AARP.
The legislative filing arrives against the backdrop of what the bill describes as a broader regulatory push targeting scam advertising across social platforms. Internal documents from the company referenced earlier indicate it has developed a global regulatory playbook intended to influence or respond to advertiser verification requirements. Company spokespeople have characterized such verification mandates as "not a silver bullet," and have said the firm cooperates with regulators on anti-scam efforts while disputing claims that it sought to stall or weaken regulations.
Supporters of the SCAM Act and its backers argue the combination of mandatory verification, expedited review protocols, and the threat of both federal and state enforcement will create stronger incentives for platforms to police advertising that harms consumers. The bill simultaneously raises questions for platforms about how to operationalize identity and business verification at scale while balancing advertiser relationships and moderation capacity.
What the bill requires
- Verification of advertisers via government-issued identification or confirmation of a business's legal existence.
- Prompt review and action on reports of scam advertising from users or government entities.
- Treatment of non-compliance as a violation of the FTC's prohibition on unfair or deceptive business practices.
- Authorization for state attorneys general to bring civil actions over alleged violations.
The proposal marks a significant regulatory push that, if enacted, would affect social media operators, advertisers, and financial institutions concerned about fraud-related losses. It also places additional compliance obligations on platforms that monetize through advertising.