Senators Propose New Rules to Curb Scam Ads * Science and Technology Times

Two U.S. senators have introduced a bipartisan bill aimed at reducing fraudulent advertising on social media platforms.
The proposal would require companies to verify advertisers and respond quickly to scam reports.
Regulators and lawmakers are increasingly scrutinizing how platforms handle illicit ads and AI‑generated harmful content.

New Legislation Targets Online Scam Advertising

U.S. Senators Ruben Gallego and Bernie Moreno have introduced a bipartisan bill designed to curb fraudulent advertising on major social media platforms. The Safeguarding Consumers from Advertising Misconduct Act — the SCAM Act — would require platforms to take “reasonable steps” to prevent scam ads or face enforcement actions from the Federal Trade Commission and state attorneys general. Lawmakers argue that platforms profiting from ads must ensure those ads are legitimate. Both senators emphasized that companies should not benefit financially from content that harms consumers.

The bill follows growing concern about the scale of scam advertising online. A Reuters investigation reported that Meta expected to earn around 10 percent of its 2024 revenue — roughly $16 billion — from ads promoting scams or illicit products, according to internal documents. That report prompted senators Josh Hawley and Richard Blumenthal to urge federal regulators to investigate Meta’s advertising practices. Meta disputed the figures, saying its internal estimates overstated the proportion of revenue tied to harmful ads.

Under the proposed legislation, platforms would be required to verify government‑issued identification for individual advertisers or confirm the legal existence of businesses. They would also need to promptly review and act on scam reports submitted by users or government agencies. Failure to comply would be treated as a violation of the FTC’s rules against unfair or deceptive business practices. State attorneys general would be empowered to bring civil actions against companies that violate the law.

The bill has received support from the American Bankers Association and consumer advocacy groups such as AARP. These organizations argue that scam ads have become increasingly sophisticated and widespread. They say stronger verification requirements could help reduce financial losses for consumers. The legislation aims to create a more consistent national standard for how platforms handle fraudulent advertising.

Regulators Increase Pressure on Social Media Platforms

The introduction of the SCAM Act comes amid heightened regulatory scrutiny of social media companies. Meta has acknowledged internally that regulators worldwide are pushing for stricter rules on scam prevention. Reuters reported that the company developed a “regulatory playbook” to delay or influence advertiser verification requirements. Meta has denied attempting to weaken regulations and says it works with authorities to reduce scams.

A Meta spokesperson has previously stated that the company “aggressively fights fraud and scams” because neither users nor legitimate advertisers want such content. The spokesperson also argued that verification requirements alone are not a complete solution. Meta maintains that it invests heavily in detection systems and partnerships to limit harmful ads. However, lawmakers say these efforts have not gone far enough.

The bill’s authors argue that some platforms have relaxed verification processes to avoid losing advertising revenue. They claim this has allowed scammers to exploit the systems more easily. The legislation seeks to reverse this trend by making verification mandatory rather than optional. It also aims to hold platforms accountable when they fail to act on reports of fraudulent activity.

Regulators have increasingly focused on the role of AI in enabling new forms of scams. AI‑generated content can make fraudulent ads more convincing and harder to detect. Lawmakers say platforms must adapt their safety measures to address these emerging threats. The SCAM Act is intended to ensure that companies update their practices as technology evolves.

Growing Concerns Over AI‑Driven Harmful Content

The debate over scam advertising has expanded as AI tools become more widely used in content creation. Lawmakers worry that generative AI can produce realistic images, videos and text that make scams more effective. Platforms are under pressure to develop safeguards that can detect and block such content. The SCAM Act does not directly regulate AI tools but would require platforms to respond more quickly to harmful ads generated using them.

Consumer advocates say scam ads have become a major source of financial harm, particularly for older adults. AARP, one of the bill’s supporters, has warned that social media scams often target vulnerable users. Banks have also expressed concern about the rise in fraudulent ads impersonating financial institutions. The legislation aims to reduce these risks by improving advertiser transparency.

The bill’s introduction reflects a broader shift toward holding platforms responsible for the content they monetize. Lawmakers argue that companies should not profit from harmful or deceptive advertising. The SCAM Act would create clearer legal consequences for failing to prevent or remove scam ads. Its bipartisan support suggests that online fraud is becoming a shared priority across political lines.