US Senators Brings Bill Against Scam Ads on Social Media Platforms

A bipartisan group of US senators has introduced legislation that would require social media companies to verify advertisers and take stronger action against online scams, increasing regulatory pressure on platforms accused of profiting from fraudulent advertising.

The proposed law, titled the Safeguarding Consumers from Advertising Misconduct Act (SCAM Act), was introduced by Senators Ruben Gallego and Bernie Moreno. The bill would require social media platforms to take “reasonable steps” to prevent scam advertising or face enforcement action from the Federal Trade Commission (FTC) and state attorneys general.

“We can’t sit by while social media companies have business models that knowingly enable scams that target the American people,” Moreno, a Republican from Ohio, said in a statement. Gallego, a Democrat from Arizona, said companies that earn revenue from advertising have a responsibility to ensure ads on their platforms are legitimate.

Under the bill, social media companies would be required to verify advertisers using government-issued identification or confirm the legal existence of businesses before allowing them to run ads. Platforms would also be obligated to promptly investigate and act on reports of scam advertising submitted by users or government agencies.

Failure to comply would be treated as a violation of federal prohibitions against unfair or deceptive business practices. The legislation would empower both the FTC and state attorneys general to bring civil actions against platforms accused of breaching the requirements.

The bill’s introduction follows heightened scrutiny of Meta Platforms, which owns Facebook, Instagram and WhatsApp. A recent press release accompanying the legislation cited internal company documents suggesting Meta expected around 10% of its 2024 revenue — approximately $16 billion — to come from ads linked to scams and other illicit products.

Following those disclosures, US Senators Josh Hawley and Richard Blumenthal urged the FTC and the Securities and Exchange Commission to investigate Meta’s handling of illicit advertising on its platforms.

The text of the SCAM Act argues that some online platforms have weakened advertiser verification processes to avoid losing ad revenue, even as digital platforms have become a primary channel for online fraud.

The proposed legislation has received backing from industry and consumer groups, including the American Bankers Association and advocacy organisations such as AARP.

The move comes amid what Meta has acknowledged internally is a growing global regulatory crackdown on online scams, as governments seek to hold digital platforms more accountable for fraudulent activity facilitated through paid advertising.

If passed, the bill could significantly reshape how social media companies manage advertising, increasing compliance costs while strengthening consumer protections against online fraud.