A bipartisan effort in the U.S. Senate aims to curb the proliferation of scam advertisements on social media platforms. On , Senators Ruben Gallego (D-AZ) and Bernie Moreno (R-OH) introduced the Safeguarding Consumers from Advertising Misconduct (SCAM) Act, legislation designed to hold platforms accountable for fraudulent ads that generate revenue.
The core principle of the SCAM Act is to require social media companies to take “reasonable steps” to prevent deceptive or fraudulent advertising. Currently, platforms often rely on automated systems and user reports to identify and remove scam ads, a process that can be slow and inconsistent. The bill seeks to shift the onus onto the platforms to proactively prevent these ads from appearing in the first place, particularly those from which they profit. If platforms fail to do so, the Federal Trade Commission (FTC) and state attorneys general would have the authority to pursue civil legal action.
The impetus for the legislation stems, in part, from a Reuters report last November detailing the significant revenue Meta—the parent company of Facebook, Instagram and WhatsApp—reportedly generates from scam advertisements. According to the report, Meta internally estimated that up to 10 percent of its 2024 revenue, potentially as much as $16 billion, originated from fraudulent schemes. These include fraudulent e-commerce, investment scams, illegal online casinos, and the sale of prohibited medical products.
The Reuters report also highlighted concerning internal practices at Meta regarding the enforcement of ad policies. The company reportedly allowed small-scale fraudsters to post multiple ads before taking action, requiring at least eight flags before removal. Larger advertisers, conversely, were allegedly permitted to accrue over 500 violations before facing consequences. Internal discussions reportedly focused on minimizing any financial impact to Meta, with managers instructed to avoid actions that would cost the company more than 0.15 percent of its total revenue.
This situation underscores a fundamental conflict of interest: platforms profit directly from the ads displayed on their services, creating a disincentive to aggressively police fraudulent content. The SCAM Act attempts to address this by introducing a legal deterrent, forcing platforms to prioritize consumer protection over short-term revenue gains.
The financial impact of online fraud is substantial. The FTC estimates that Americans lost nearly $19 billion to fraud in 2024 (adjusted for underreporting), with an estimated $81.5 billion of those losses impacting seniors. The SCAM Act aims to mitigate these losses by making it more difficult for scammers to operate on social media platforms.
Senator Gallego emphasized the responsibility of platforms to ensure the integrity of their advertising ecosystems. “If a company is making money from running ads on their site, it has a responsibility to make sure those ads aren’t fraudulent,” he stated. Senator Moreno echoed this sentiment, arguing that social media companies should not be allowed to profit from scams that target Americans.
The bill doesn’t focus on individual scams after they’ve occurred, but rather on the preventative measures platforms should implement before an ad is published and the processes for addressing reported fraud. Currently, users often find that reports of scam ads are lost in automated systems, responses are delayed, and the ads continue to run. The SCAM Act seeks to change this dynamic by requiring platforms to verify advertisers and implement more robust fraud prevention mechanisms, such as providing users with better tools to report fraudulent activity.
While the specifics of “reasonable steps” are not defined within the legislation, the intent is to compel platforms to move beyond reactive measures and adopt proactive strategies to identify and block fraudulent advertisers. This could include enhanced identity verification processes, more sophisticated ad review algorithms, and increased investment in human moderation. The effectiveness of the SCAM Act will ultimately depend on how the FTC and state attorneys general interpret and enforce its provisions.
The introduction of the SCAM Act reflects a growing concern among regulators and lawmakers about the role of social media platforms in facilitating online fraud. It represents a significant step towards holding these platforms accountable for the content they host and the financial harm caused by deceptive advertising practices. The bill’s progress through Congress will be closely watched by both the tech industry and consumer advocacy groups.
