The Safeguarding Consumers from Advertising Misconduct (SCAM) Act would require online platforms—including social media sites and other user-generated content services—to take reasonable steps to prevent fraudulent and deceptive paid advertisements from being displayed. Online platforms would need to verify advertiser identities before accepting payment for ads, implement fraud detection systems, and investigate and remove suspected scam ads within strict timelines (72 hours to investigate, 24 hours to remove after investigation concludes). The bill affects major social media platforms and any websites that accept payment for advertisements. The Federal Trade Commission would enforce the law with authority to issue regulations within one year, and state attorneys general could also pursue enforcement actions; individual consumers harmed by scams could file lawsuits for damages, including up to triple damages for willful violations. Notably, the bill carves out Section 230 liability protections for violations, meaning platforms cannot use that federal immunity defense against claims under this law. The FTC must also report to Congress within nine months on whether additional authority is needed to address online scams involving financial transactions.
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