SCAM Act
- Bill Number
- S. 3774
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Commerce
- Status
- Introduced
- Latest Action
- 2026-02-04: Read twice and referred to the Committee on Commerce, Science, and Transportation.
- Last Updated
- 2026-04-14T11:03:26Z
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 fraudulent or deceptive commercial advertisements. It addresses the growing problem of digital fraud, such as fake giveaways, impersonation scams, and AI-generated deceptions, which have led to billions in losses, particularly among younger and older adults.
Key Provisions
- Prohibition on Fraudulent Ads: Online platforms cannot 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 existing Federal Trade Commission (FTC) standards.
- Platform Requirements:
- Verify advertiser identity before placement (e.g., legal name, physical location, government ID, or business documents; measures to block fake identities).
- Implement programs to detect and mitigate impersonations (e.g., using stolen images or AI voices).
- Use automated and manual systems to detect fraudulent ads.
- Provide a clear tool for users or authorities to report suspicious ads.
- Investigation and Removal:
- Platforms must investigate reported or detected ads within 72 hours and notify reporters of outcomes within 24 hours after investigation.
- Remove violating ads within 24 hours of determination (platforms can remove them earlier if needed).
- Presumed Compliance: Platforms can gain a presumption of taking reasonable steps by submitting an FTC-approved detection program and demonstrating active enforcement with adequate resources. This presumption does not apply if the FTC finds non-compliance in a specific case.
- 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 scams (e.g., regulatory holes, better information sharing with banks, and recommendations for new laws).
- Enforcement Mechanisms:
- FTC Enforcement: Violations are treated as unfair or deceptive practices under the FTC Act, with full FTC powers (e.g., fines, 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 fees; suits must start within five years of discovery.
- Definitions:
- "Online platform" includes websites, apps, or services like social media that host user-generated content (e.g., videos, images).
- Excludes non-commercial or unpaid content.
Significant Changes to Existing Law
- Limits Section 230 Immunity: Section 230 of the Communications Act (which generally shields platforms from liability for user content) does not apply to violations of this Act, ending broad protections for platforms that fail to prevent paid fraudulent ads. However, it preserves "good faith" protections for platforms blocking harmful content.
- New Obligations Beyond Current Practices: Introduces mandatory advertiser verification, rapid investigation timelines, and FTC-approved compliance programs, moving beyond voluntary or inconsistent efforts by platforms.
- No Preemption of State Laws: States can enact stronger rules without federal override.
- Severability Clause: If any part is invalidated, the rest remains effective.
Potential Impacts
- On Citizens: Likely reduces exposure to scams on social media, potentially lowering financial losses (e.g., the $195.9 billion estimated in 2024 fraud). Younger users (18-29) and older adults may benefit most, as they report high scam contact via platforms.
- On Government Agencies: Empowers the FTC with broader enforcement tools and rulemaking authority, increasing workload for oversight and investigations. State attorneys general gain new federal litigation options, possibly leading to more coordinated actions.
- On Online Platforms: Increases compliance costs (e.g., verification tech, staffing) and legal risks, which could deter some ads but encourage better screening. Platforms may face more lawsuits or fines for non-compliance.
- On International Relations: Minimal direct impact, though global platforms (e.g., operating in the U.S.) must comply, potentially influencing international ad standards or data-sharing with foreign regulators.
Main Stakeholders Affected
- Consumers: Primary beneficiaries, gaining protection from fraud and easier reporting/recourse options.
- Online Platforms: Bear the brunt of new verification, detection, and removal duties; includes social media companies like Meta or TikTok.
- Advertisers: Legitimate businesses face stricter ID checks, while scammers are deterred; fraudulent advertisers risk bans and investigations.
- Government Entities: FTC leads enforcement; state attorneys general can pursue cases; financial institutions may see indirect benefits from the required scam report.
- Vulnerable Groups: Young adults (18-29), older adults, and scam victims, who report disproportionate losses.
Notable Legal, Constitutional, or Political Implications
- Legal Implications: Creates a direct path for liability in ad fraud cases, potentially leading to increased litigation under FTC rules or private suits. The five-year statute of limitations and treble damages for willful acts strengthen consumer remedies but may burden courts.
- Constitutional Implications: Targets commercial speech (ads), which receives less First Amendment protection than pure expression, reducing free speech challenges. However, broad "deceptive" definitions could invite disputes over what constitutes "reasonable steps."
- Political Implications: Bipartisan sponsorship (Democrat Gallego and Republican Moreno) signals cross-aisle support for consumer protection amid rising scams. It critiques overly broad interpretations of Section 230 (from 1996), pushing for updates to modern digital threats without fully dismantling the law, which could influence future tech regulation debates.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (7)
Sen. Moreno, Bernie [R-OH], Sen. McCormick, David [R-PA], Sen. Welch, Peter [D-VT], Sen. Klobuchar, Amy [D-MN], Sen. Britt, Katie Boyd [R-AL], Sen. Coons, Christopher A. [D-DE], Sen. Graham, Lindsey [R-SC]
Recent Actions
- 2026-02-04: Read twice and referred to the Committee on Commerce, Science, and Transportation.
- 2026-02-04: Introduced in Senate
Bill Versions
- Safeguarding Consumers from Advertising Misconduct Act — issued 2026-02-04 — PDF (17 pages)