SCAM Act
- Sponsor
- Sen. Gallego, Ruben [D-AZ]
- Committees
- Commerce, Science, and Transportation Committee (primary)
- Last action
- Feb 4, 2026
Bottom line
The SCAM Act aims to hold online platforms accountable for paid fraudulent or deceptive advertisements by mandating proactive detection and verification measures and creating new enforcement avenues for consumers and regulators.
What it actually does
This bill makes it unlawful for online platforms to display fraudulent or deceptive commercial advertisements if they accepted payment and failed to take reasonable steps to prevent such ads. It mandates specific procedures for platforms, including advertiser identity verification, impersonation detection, and automated/manual fraud detection systems. The Act also establishes investigation and removal requirements for reported ads, creates enforcement mechanisms for the Federal Trade Commission (FTC), State Attorneys General, and a private right of action, and explicitly states that Section 230(c)(1) immunity does not apply to violations of this Act.
Proponents argue
Proponents argue that the bill is necessary to combat the proliferation of online scams, which cause billions in consumer losses annually, especially targeting vulnerable populations like older adults and young people. They contend that current voluntary efforts by platforms are insufficient and that Section 230 has been interpreted too broadly, shielding platforms from responsibility for harmful content they profit from. The bill would restore accountability and protect consumers by requiring platforms to implement robust verification and detection systems.
Opponents contend
Opponents might argue that the bill places an undue burden on online platforms, particularly smaller ones, by mandating extensive verification and detection procedures that could be costly and difficult to implement. They may also raise concerns about potential impacts on free speech or the ability of legitimate advertisers to operate efficiently if verification processes become too cumbersome. Some might argue that existing FTC authority is sufficient or that the bill could lead to over-censorship or false positives in ad removal.
The bill is relatively short and clearly structured, allowing an informed reader to understand its core provisions and implications within a reasonable timeframe.
Section 3(a)
Prohibition on Displaying Fraudulent or Deceptive Commercial Advertisements
This provision makes it illegal for an online platform to display an advertisement that is fraudulent or deceptive if the platform accepted payment for the ad and failed to take 'reasonable steps' to prevent its display. This creates a direct liability for platforms under specific conditions related to paid content.
Supporters argue
Supporters argue this provision directly addresses the core problem by holding platforms accountable for ads they profit from, which is crucial for consumer protection against widespread online scams.
Critics contend
Opponents might argue that this creates an overly broad liability standard, potentially holding platforms responsible for content they cannot reasonably control, even with 'reasonable steps.'
Tradeoffs
This provision balances platform responsibility for content they monetize against the practical challenges of policing all advertisements, aiming to shift more accountability to platforms.
Section 3(b)(1)
Required Advertiser Verification and Fraud Detection Procedures
This mandates that online platforms accepting payment for ads must establish procedures to verify advertiser identity (including legal name, physical location, government ID/business documentation, and contact info) and prevent circumvention. It also requires an active impersonation detection program, automated and manual fraudulent ad detection systems, and a clear user tool for reporting suspected ads.
Section 3(b)(2)
Investigation and Removal of Fraudulent Advertisements
This provision requires online platforms to investigate reported or detected fraudulent or deceptive ads within 72 hours. If, after investigation, an ad is determined to violate the Act, the platform must remove it within 24 hours. Platforms are also permitted to remove ads prior to the conclusion of an investigation.
Section 3(b)(3)
Presumed Compliance Program
An online platform is presumed to have taken 'reasonable steps' if it submits a fraudulent and deceptive commercial advertisement detection program (incorporating the required procedures) to the FTC, the FTC approves it, and the platform demonstrates compliance and active enforcement with adequate resources. This presumption can be overcome in individual enforcement actions if non-compliance is shown.
Section 3(d)
Federal Trade Commission Enforcement Authority
Violations of this Act or its regulations are treated as violations of a rule defining an unfair or deceptive act or practice under the Federal Trade Commission Act. This grants the FTC full enforcement powers, including penalties, privileges, and immunities, to address non-compliance by online platforms.
Section 3(e)
State Attorney General Enforcement Authority
State Attorneys General are authorized to bring civil actions in federal court on behalf of their state residents to enjoin violations, enforce compliance, obtain damages, restitution, or other appropriate relief. States must notify the FTC before initiating such actions, and the FTC has the right to intervene.
Section 3(f)
Private Right of Action for Injured Persons
Individuals who have been injured by a violation of the Act can bring a civil action in federal court. They can seek injunctive relief, actual damages (which can be trebled for willful or knowing violations), and other legal or equitable relief. Prevailing plaintiffs are entitled to litigation costs and reasonable attorney's fees. Actions must be commenced within 5 years of discovering the violation.
Section 3(g)(1)(A)
Inapplicability of Section 230(c)(1) Immunity
This provision explicitly states that Section 230(c)(1) of the Communications Act of 1934, which generally shields online platforms from liability for user-generated content, shall not apply to any violation of this Act. This removes a key legal defense for platforms regarding fraudulent or deceptive commercial advertisements.
Defines 'deceptive' by referencing Section 5 of the Federal Trade Commission Act and Commission guidance/federal court precedent, but then specifically limits it for purposes of this Act to 'material misrepresentations, omissions, or practices that are likely to cause financial harm to a consumer.'
Section 5(2)
Why it matters:While standard legislative practice to define terms, the specific narrowing of 'deceptive' to financially harmful practices is a substantive choice that could be missed.
Case for: Supporters would argue this limitation provides clarity and prevents overreach, ensuring the Act targets only financially harmful deception, aligning with the bill's intent to combat scams.
Case against: Critics might argue that by explicitly limiting 'deceptive' to financial harm, the bill could inadvertently exclude other forms of deception that, while not directly financial, could still be harmful or contribute to an ecosystem of misinformation.
Estimated impact: This narrows the scope of actionable deception under this Act, potentially reducing the number of cases or types of ads that can be challenged.
Defines 'online platform' as any public-facing website, online service, application, or mobile application that 'predominantly provides a community forum for user-generated content,' such as sharing videos, images, games, audio files, or other content, including social media services, social networks, or virtual reality environments.
Section 5(3)
Why it matters:Standard legislative practice for definitions, but this specific phrasing is critical for determining the applicability of the entire bill.
Case for: Proponents would argue this definition targets the platforms most responsible for the spread of scam ads, namely those built around user-generated content and social interaction, aligning with the findings in Section 2. It avoids sweeping in all websites or online services.
Case against: Critics might argue that the 'predominantly' clause could create loopholes, allowing some platforms that host significant user-generated content but also have other primary functions to evade the requirements. The definition might also be seen as too narrow, missing other types of online services that facilitate fraudulent ads.
Estimated impact: This definition determines the universe of entities subject to the Act's requirements, focusing on social media and similar platforms.