SCAM Act
- Bill Number
- H.R. 7548
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Commerce
- Status
- Introduced
- Latest Action
- 2026-02-12: Referred to the House Committee on Energy and Commerce.
- Last Updated
- 2026-07-07T08:05:33Z
AI-Generated Summary
Purpose of the Legislation
The Safeguarding Consumers from Advertising Misconduct Act (SCAM Act) aims to protect consumers from online scams by holding online platforms accountable for displaying fraudulent or deceptive commercial advertisements. It addresses the growing problem of digital fraud, such as fake giveaways, impersonations, and scams using AI, which have led to billions in losses, particularly through social media.
Key Provisions
- Prohibition on Fraudulent Ads: It is illegal for online platforms (e.g., social media sites, video-sharing services) to display paid fraudulent or deceptive commercial ads if they fail to take "reasonable steps" to prevent them. "Deceptive" means material misrepresentations or omissions likely to cause financial harm to consumers, based on Federal Trade Commission (FTC) standards.
- Required Procedures for Platforms:
- Verify advertiser identity before placement, including legal name, physical location, government ID (or business documents), contact info, and measures against fake identities.
- Implement programs to detect and mitigate impersonations (e.g., fake business or government copies).
- Use automated and manual systems to spot fraudulent ads.
- Provide a clear tool for users to report suspicious ads.
- Investigation and Removal: Platforms must investigate reported or detected suspicious ads within 72 hours and notify reporters of results within 24 hours after investigation. If confirmed fraudulent, ads must be removed within 24 hours (platforms can remove them sooner if needed).
- Presumed Compliance: Platforms can avoid liability if they submit an FTC-approved detection program (including the above procedures) and actively enforce it with sufficient resources. However, this presumption can be rebutted in enforcement cases.
- Regulations and Reporting: The FTC must issue implementing rules within one year of enactment, review them annually, and submit a report within nine months assessing gaps in preventing online financial scams, including recommendations for better information-sharing and new laws.
- Enforcement Mechanisms:
- FTC Enforcement: Violations are treated as unfair or deceptive practices under the FTC Act, allowing the FTC to investigate, sue, and impose penalties like fines or injunctions.
- State Enforcement: State attorneys general can sue on behalf of residents for injunctions, damages, or other relief, after notifying the FTC (which can intervene).
- Private Right of Action: Injured individuals can sue for injunctive relief, actual damages (up to triple for willful violations), restitution, costs, and attorney's fees, within five years of discovering the violation.
- Definitions: "Online platform" includes websites, apps, or services focused on user-generated content like social networks or virtual reality environments.
Significant Changes to Existing Law
- Limits Section 230 Immunity: Overrides Section 230(c)(1) of the Communications Act (which generally shields platforms from liability for user content) for violations of this Act, meaning platforms can be held responsible for paid fraudulent ads they fail to prevent. It preserves Section 230(c)(2) protections for platforms that proactively remove harmful content in good faith.
- No Preemption of State Laws: Allows state and local anti-fraud laws to remain in effect alongside this federal law.
- Expands FTC Authority: Treats violations as FTC rule breaches, enabling broader use of existing FTC powers without limiting other laws.
Potential Impacts
- On Consumers: Reduces exposure to scams, potentially lowering financial losses (estimated at $195.9 billion in 2024, with $81.5 billion for older adults) and rebuilding trust in online advertising and digital payments.
- On Government Agencies: Increases FTC workload for rulemaking, approvals, enforcement, and reporting; empowers state attorneys general for local actions, possibly leading to more coordinated anti-scam efforts.
- On Online Platforms: Requires significant investments in verification, detection, and response systems, which could raise operational costs and slow ad placements, but offers a compliance "safe harbor" for approved programs.
- On International Relations: Minimal direct impact, though it may affect global platforms operating in the U.S. by imposing stricter U.S.-based ad standards, potentially influencing international scam trends.
Main Stakeholders Affected
- Consumers: Primary beneficiaries, especially younger users (ages 18-29) and older adults vulnerable to social media-initiated scams.
- Online Platforms: Bear compliance burdens, including social media companies (e.g., those handling videos, images, or games) that monetize ads.
- Advertisers: Legitimate businesses gain from reduced impersonation risks but face stricter verification hurdles.
- Government Entities: FTC leads enforcement; state attorneys general gain new tools; financial institutions may indirectly benefit from scam reduction recommendations.
- Scammers/Fraudsters: Face heightened barriers to placing deceptive ads, potentially disrupting their operations.
Notable Legal, Constitutional, or Political Implications
- Legal Implications: Introduces a private right of action, enabling individuals to sue platforms directly, which could lead to increased litigation. The five-year statute of limitations and treble damages for willful acts strengthen deterrence. Severability clause ensures the law survives if parts are invalidated.
- Constitutional Implications: By carving out exceptions to Section 230, it balances free speech protections with consumer safety, focusing narrowly on paid commercial ads to avoid broad First Amendment challenges (courts have interpreted Section 230 broadly, contrary to original intent per findings).
- Political Implications: Responds to bipartisan concerns over online fraud surges, as shown by FTC data and AARP reports; could set precedent for further Section 230 reforms without fully dismantling platform immunities, fostering debates on tech accountability versus innovation.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (42)
Rep. Correa, J. Luis [D-CA-46], Rep. Kim, Young [R-CA-40], Rep. Friedman, Laura [D-CA-30], Rep. Lawler, Michael [R-NY-17], Rep. Shreve, Jefferson [R-IN-6], Rep. Harrigan, Pat [R-NC-10], Rep. Whitesides, George [D-CA-27], Rep. Bergman, Jack [R-MI-1], Rep. Moolenaar, John R. [R-MI-2], Rep. Huizenga, Bill [R-MI-4], Rep. Tlaib, Rashida [D-MI-12], Rep. Smith, Adam [D-WA-9], Rep. Van Drew, Jefferson [R-NJ-2], Rep. Edwards, Chuck [R-NC-11], Rep. Deluzio, Christopher R. [D-PA-17], Rep. Foushee, Valerie P. [D-NC-4], Rep. Carbajal, Salud O. [D-CA-24], Rep. Mann, Tracey [R-KS-1], Rep. Pettersen, Brittany [D-CO-7], Rep. Carson, André [D-IN-7], Rep. Amo, Gabe [D-RI-1], Rep. Davis, Donald G. [D-NC-1], Rep. Craig, Angie [D-MN-2], Rep. Vasquez, Gabe [D-NM-2], Rep. Frankel, Lois [D-FL-22], Rep. Stansbury, Melanie A. [D-NM-1], Rep. Peters, Scott H. [D-CA-50], Rep. Timmons, William R. [R-SC-4], Rep. Williams, Roger [R-TX-25], Rep. Steil, Bryan [R-WI-1], Rep. Kiggans, Jennifer A. [R-VA-2], Rep. Hayes, Jahana [D-CT-5], Rep. Donalds, Byron [R-FL-19], Rep. Stutzman, Marlin A. [R-IN-3], Rep. Thanedar, Shri [D-MI-13], Rep. Moore, Tim [R-NC-14], Rep. Barr, Andy [R-KY-6], Rep. Patronis, Jimmy [R-FL-1], Rep. De La Cruz, Monica [R-TX-15], Rep. Rose, John W. [R-TN-6], Rep. McBride, Sarah [D-DE-At Large], Rep. Suozzi, Thomas R. [D-NY-3]
Recent Actions
- 2026-02-12: Referred to the House Committee on Energy and Commerce.
- 2026-02-12: Introduced in House
- 2026-02-12: Introduced in House
Bill Versions
- Safeguarding Consumers from Advertising Misconduct Act — issued 2026-02-12 — PDF (17 pages)