When you see bipartisan support behind blooming legislation, there’s a strong sign that it’s something good. A (bipartisan!) pair of senators has introduced a new bill aimed squarely at the front end of the fraud pipeline, the online platforms where scam ads often originate. The Safeguarding Consumers from Advertising Misconduct (SCAM) Act, introduced by Sens. Bernie Moreno (R-Ohio) and Ruben Gallego (D-Ariz.), would require social media companies and other online platforms to take affirmative steps to prevent fraudulent and deceptive advertisements from appearing on their sites.
Under the proposal, online platforms would be prohibited from hosting scam ads and would be expected to implement stronger safeguards – such as clearer reporting tools and more proactive monitoring – to identify and remove fraudulent content before it reaches consumers. The bill would also bolster enforcement authority for the Federal Trade Commission and state regulators, strengthening their ability to pursue violations of existing consumer protection laws.
Trade associations have voiced support for the legislation, framing it as a necessary complement to banks’ own fraud-prevention efforts and emphasizing that while banks invest heavily in detecting and stopping fraud once it enters the financial system, too many scams begin long before a transaction ever touches a bank.
It can’t be understated that millions of Americans lose billions of dollars each year to scams that originate on social media platforms and this fact alone underscores why prevention at the source matters. From this perspective, the SCAM Act is positioned as a relatively modest expectation – that online platforms take greater responsibility for identifying and removing scammers from their ecosystems, rather than leaving banks and consumers to absorb the consequences after the fact. In that sense, fraud prevention never was (and never will be) a partisan issue, but rather a shared responsibility that should begin upstream; because, if treated as a downstream cleanup exercise – or as only “one party’s problem” – then the damage will have already been done.
The full text of the bill can be found here: [Safeguarding Consumers from Advertising Misconduct Act]
Written by:
Brett Goodnack, JD, CAMS
Compliance Advisor