US Senators Introduce Bill to Hold Social Media Platforms Accountable for Scam Ads

Two US senators from opposing parties have introduced bipartisan legislation that would force social media companies to take responsibility for fraudulent advertisements on their platforms. The Safeguarding Consumers from Advertising Misrepresentation Act, or SCAM Act, comes amid growing evidence that major tech platforms are generating billions of dollars annually from scam and illicit content targeting vulnerable Americans.

The bill, spearheaded by Democratic Senator Ruben Gallego of Arizona and Republican Senator Bernie Moreno of Ohio, would legally require platforms like Facebook, Instagram and YouTube to thoroughly investigate their advertisers and take "reasonable steps" to combat fraudulent advertising, with enforcement powers granted to the Federal Trade Commission and state attorneys general.

Background and Context

The legislation gained momentum following a report citing internal documents from Meta Platforms that revealed the company expected to earn approximately 10% of its 2024 revenue—estimated at $16 billion—from advertisements for scams and illicit products. While Meta disputed these figures, claiming their internal statistics "overestimated" the proportion of illicit revenue, the disclosure triggered calls for investigations from both the FTC and Securities and Exchange Commission.

The SCAM Act also alleges that some platforms have "abandoned tighter advertiser verification processes" to avoid driving away high-revenue clients, essentially prioritizing profit over consumer protection. This represents a significant shift from previous regulatory approaches that treated tech platforms as neutral intermediaries rather than responsible publishers.

Key Figures and Entities

Senator Bernie Moreno, a Republican from Ohio and former technology entrepreneur, emphasized the bipartisan urgency of the issue: "We can't sit by while social media companies have business models that knowingly enable scams that target the American people." His Democratic counterpart, Senator Ruben Gallego of 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."

Meta Platforms, which operates Facebook and Instagram, remains at the center of the controversy. Company spokespeople have repeatedly stated they "aggressively fight 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," according to statements provided to Reuters last year.

The legislation has garnered support from organizations representing demographics most frequently targeted by digital financial fraud, including the American Bankers Association and AARP, which advocates for older Americans who are disproportionately affected by online scams.

Legal and Financial Mechanisms

Under the SCAM Act, non-compliance would be treated as a violation of the FTC's prohibition on unfair or deceptive business practices, giving the commission significant enforcement authority. The bill establishes a clear legal framework for holding platforms accountable rather than merely the individual advertisers who often operate anonymously or internationally.

The legislation specifically targets the business model that has allowed platforms to profit from fraudulent content without adequate oversight. Internal Meta documents suggest the financial incentives are substantial, with scam-related advertising representing a significant revenue stream for major platforms. The bill aims to rebalance these incentives by making platforms financially responsible for the content they distribute and profit from.

International Implications and Policy Response

While focused on US platforms and consumers, the SCAM Act reflects growing global concern about tech platform accountability. Similar regulatory efforts are underway in the European Union through the Digital Services Act, which also places greater responsibility on platforms for content moderation and advertising verification.

The bipartisan nature of the US legislation suggests that despite political polarization on many tech issues, there is growing consensus that platforms must take greater responsibility for harmful content on their services. If passed, the SCAM Act could establish a new regulatory precedent for how democratic societies balance innovation with consumer protection in the digital age.

Sources

This report draws on legislative records from the US Senate, internal documents referenced in news reports about Meta's revenue projections, public statements from Senators Gallego and Moreno, and responses provided by Meta to Reuters. Additional context comes from the Federal Trade Commission's enforcement guidelines and public positions expressed by the American Bankers Association and AARP regarding digital fraud protection.