SCAM Act
- Sponsor
- Rep. Meuser, Daniel [R-PA-9]
- Committees
- Energy and Commerce Committee (primary)
- Last action
- Feb 12, 2026
Bottom line
The SCAM Act aims to hold online platforms accountable for fraudulent advertisements by imposing new verification and detection requirements, strict removal timelines, and removing Section 230 immunity for paid deceptive content.
What it actually does
This bill, known as the SCAM Act, makes it unlawful for online platforms to display fraudulent or deceptive commercial advertisements if they accepted payment for the ad and failed to take reasonable steps to prevent its display. It mandates online platforms to implement advertiser identity verification, impersonation detection, automated and manual fraud detection systems, and user reporting tools. The bill also establishes specific timelines for investigating and removing reported fraudulent ads and removes Section 230(c)(1) immunity for violations.
Proponents argue
Proponents argue that online platforms have become a primary conduit for scams, leading to billions in consumer losses, and that current voluntary efforts are insufficient. They contend that platforms profit from these ads while shielded by an overly broad interpretation of Section 230, and this bill provides necessary tools for consumer protection and platform accountability.
Opponents contend
Opponents may argue that the bill imposes significant operational and financial burdens on online platforms, potentially stifling innovation and making it harder for legitimate small businesses to advertise. They might also raise concerns that the carve-out of Section 230 immunity could lead to over-censorship or a chilling effect on online services, and that the strict timelines for ad removal are impractical.
The bill is relatively short and clearly structured, making it accessible for an informed reader to understand its core provisions within a reasonable timeframe.
Sec. 3(a)
Prohibition on Fraudulent or Deceptive Commercial Advertisements
This provision makes it illegal for an online platform to display a fraudulent or deceptive commercial advertisement if the platform accepted payment for it and did not take reasonable steps to prevent its display. This establishes a new liability standard for platforms regarding paid advertising content.
Supporters argue
Supporters argue this provision directly addresses the problem of platforms profiting from harmful ads by creating a clear legal obligation to prevent such content, thereby protecting consumers from financial harm.
Critics contend
Critics may contend that defining 'reasonable steps' could be ambiguous and lead to inconsistent enforcement, potentially exposing platforms to excessive liability even when acting in good faith.
Tradeoffs
The provision balances the desire for greater platform accountability and consumer protection against concerns about the potential for over-regulation and the practical challenges of policing all paid content.
Sec. 3(b)(1)
Mandatory Advertiser Verification and Fraud Detection Procedures
This section requires online platforms that accept payment for ads to establish and implement specific procedures. These include verifying the legal name, physical location, government-issued identification, and contact information of advertisers. Platforms must also have active impersonation detection, automated and manual fraud detection systems, and a clear tool for users to report suspicious ads.
Sec. 3(b)(2)
Timely Investigation and Removal of Fraudulent Advertisements
This provision mandates that if a fraudulent or deceptive commercial advertisement is reported by a person (including a government entity) or detected by the platform's systems, the online platform must investigate it within 72 hours. If the investigation confirms a violation, the advertisement must be removed from the platform within 24 hours. Platforms are also permitted to remove ads during an ongoing investigation.
Sec. 3(b)(3)
Presumed Compliance through FTC-Approved Programs
This section offers online platforms a path to presumed compliance: if they submit a fraudulent and deceptive commercial advertisement detection program to the Federal Trade Commission (FTC) that incorporates all required procedures, and the FTC approves it, the platform is presumed to have taken reasonable steps to prevent fraudulent ads. This presumption applies as long as the platform demonstrates active enforcement and adequate resources for the program.
Sec. 3(d) & (e)
Federal and State Enforcement Powers
This bill grants the Federal Trade Commission (FTC) the authority to enforce its provisions, treating violations as unfair or deceptive acts under the Federal Trade Commission Act. Additionally, it authorizes State Attorneys General to bring civil actions on behalf of their residents in federal court to enjoin violations, enforce compliance, and obtain damages or restitution, requiring them to notify the FTC before initiating such actions.
Sec. 3(f)
Private Right of Action for Injured Persons
This section creates a private right of action, allowing any person injured by a violation of the Act to bring a civil lawsuit in federal court. Plaintiffs can seek injunctive relief, actual damages (which can be tripled for willful or knowing violations), and other legal or equitable relief. Prevailing plaintiffs are also entitled to litigation costs and reasonable attorney's fees, with a 5-year statute of limitations.
Sec. 3(g)(1)(A)
Removal of Section 230(c)(1) Immunity for Fraudulent Ads
This critical provision explicitly states that Section 230(c)(1) of the Communications Act of 1934, which generally shields online platforms from liability for content posted by users, shall not apply to any violation of this Act. This means platforms would not be immune from liability when displaying fraudulent or deceptive commercial advertisements for which they accepted payment and failed to take reasonable steps.
Sec. 4
FTC Report on Online Scams and Potential for Additional Rulemaking
This section requires the Federal Trade Commission (FTC), in consultation with other federal agencies, to submit a report to Congress within nine months. The report must assess whether additional statutory authority is needed to prevent online scams involving financial transactions, analyze regulatory gaps, examine improved information-sharing mechanisms, and provide recommendations for legislation and administrative action.
Requires online platforms to implement 'reasonable measures to prevent circumvention of such verification requirements through the use of any false, stolen, or synthetic identity.'
Sec. 3(b)(1)(A)(iv)
Why it matters:This is standard legislative practice for detailing specific operational requirements within a larger mandate, rather than an attempt to obscure.
Case for: Supporters argue this clause is essential to prevent sophisticated fraudsters from bypassing verification, ensuring the overall effectiveness of the bill's preventative measures.
Case against: Critics might argue that defining 'reasonable measures' against constantly evolving synthetic identities is an impossible standard, placing an undue burden on platforms.
Estimated impact: Significantly impacts the technical and operational complexity of platform verification systems, requiring advanced fraud detection capabilities.
Mandates the FTC to promulgate regulations to implement this section within 1 year and review/revise them annually.
Sec. 3(c)
Why it matters:Standard legislative practice for delegating detailed rulemaking authority to an agency, not an attempt to obscure.
Case for: Proponents argue this ensures the law remains adaptable to new scam tactics and technological advancements, allowing the FTC to define 'reasonable steps' and other specifics as needed.
Case against: Opponents may express concern that this grants significant power to the FTC to shape the law's impact through regulation, potentially leading to unforeseen burdens or interpretations.
Estimated impact: Determines the practical implementation and specific compliance requirements for online platforms, shaping the bill's ultimate effectiveness.
Explicitly states that nothing in this section or any regulation promulgated under it shall preempt or otherwise affect any State or local law.
Sec. 3(g)(2)
Why it matters:This is a standard clause to clarify the interaction of federal and state law, ensuring states retain their authority, rather than an attempt to hide a provision.
Case for: Supporters argue this preserves the ability of states to enact and enforce their own consumer protection laws, providing an additional layer of defense against online fraud.
Case against: Critics might contend that this could lead to a patchwork of differing state and local regulations, creating compliance challenges for online platforms operating nationwide.
Estimated impact: Allows for potentially diverse and cumulative regulatory requirements across different jurisdictions, increasing compliance complexity for platforms.
The definition of 'deceptive' for purposes of this Act 'is limited to material misrepresentations, omissions, or practices that are likely to cause financial harm to a consumer.'
Sec. 5(2)(C)
Why it matters:Definitions are typically placed at the end of a bill, but this specific limitation significantly narrows the scope of the bill's applicability compared to the broader FTC Act definition of 'deceptive.'
Case for: Proponents might argue this focus ensures the bill targets the most impactful forms of deception – those causing direct financial harm – aligning with the bill's stated purpose of combating scams and fraud.
Case against: Critics could contend that this limitation might exclude other forms of deceptive advertising that, while not directly causing financial harm, still mislead consumers or undermine market fairness, thereby narrowing the bill's protective scope.
Estimated impact: Narrows the scope of prohibited conduct to focus specifically on financially harmful deception, potentially excluding other forms of misleading advertising.