SCAM Act

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7548 Introduced in House (IH)]

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119th CONGRESS
  2d Session
                                H. R. 7548

 To prohibit online platforms from displaying fraudulent or deceptive
           commercial advertisements, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           February 12, 2026

Mr. Meuser (for himself and Mr. Correa) introduced the following bill;
       which was referred to the Committee on Energy and Commerce

_______________________________________________________________________

                                 A BILL

 To prohibit online platforms from displaying fraudulent or deceptive
           commercial advertisements, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Safeguarding Consumers from
Advertising Misconduct Act'' or the ``SCAM Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Online platforms have become a primary conduit for
        online scams or other digital advertising-related fraud,
        including fake giveaways, animal sales, deal advertisements
        tied to nonexistent products, government impersonations,
        romance scams, health scams, and impersonations using AI-cloned
        voices and stolen images targeting legitimate businesses.
            (2) According to data reported by the Federal Trade
        Commission, social media platforms are a primary contact method
        to initiate scams, with individuals ages 20 to 29 reporting
        social media was the contact method more than 38 percent of the
        time, and for individuals ages 18 to 19, that figure was 47
        percent.
            (3) According to the Commission, the estimated overall loss
        from fraud in 2024, adjusted to account for underreporting, was
        $195,900,000,000, with an estimated $81,500,000,000 lost by
        older adults.
            (4) According to the AARP, consumers filed 2,600,000 fraud
        reports in 2023, with a median individual loss of $500. Nearly
        100,000 consumers reported losses of $10,000 or more.
            (5) Some online platforms have abandoned tighter advertiser
        verification processes to avoid driving away profits from
        advertisers.
            (6) Section 230 of the Communications Act of 1934 (47
        U.S.C. 230) was enacted to protect online platforms acting as
        ``Good Samaritans'' by shielding such platforms from being
        treated as publishers of user content, while encouraging such
        platforms to block or screen offensive content.
            (7) Courts have interpreted Section 230 too broadly,
        granting sweeping immunity even to online platforms alleged to
        facilitate unlawful or harmful activity and including online
        activities that did not exist in 1996--an outcome contrary to
        Congress's original intent.
            (8) According to the Federal Trade Commission's consumer
        alert titled ``Top scams of 2024'' (March 10, 2025), ``People
        reported losing money more often when contacted through social
        media. Most people (70 percent) reported a loss when contacted
        on a social media platform--and lost more money overall.'' The
        Commission issued broad information requests to online
        platforms using the Commission's authority under section 6(b)
        of the Federal Trade Commission Act (15 U.S.C. 46(b)) in order
        to assess paid advertisement screening practices, citing the
        surge in scam ads.
            (9) Online platforms' inconsistent and optional efforts to
        mitigate the rise in scams have failed, leading to a consumer
        confidence crisis across digital financial systems.

SEC. 3. PROHIBITION ON DIGITAL ADVERTISING-RELATED FRAUD.

    (a) In General.--It shall be unlawful for an online platform to
display a fraudulent or deceptive commercial advertisement on such
platform if the online platform--
            (1) accepted payment to display such advertisement; and
            (2) failed to take reasonable steps (as described in
        subsection (b)) to prevent the fraudulent or deceptive
        commercial advertisement from being made available.
    (b) Additional Requirements for Online Platforms.--
            (1) Required procedures.--An online platform that accepts
        payment, or any other form of compensation, to display an
        advertisement shall establish and implement procedures to
        require the following:
                    (A) Procedures to verify the identity of each
                advertiser prior to the placement of a paid
                advertisement, including--
                            (i) verification of the legal name and
                        physical location of the advertiser;
                            (ii) verification of a valid and current
                        government-issued identification of the
                        advertiser, or, in the case of a business
                        entity, documentation establishing the legal
                        existence of the entity and the relation of the
                        purchaser to the entity;
                            (iii) collection of contact information for
                        the advertiser sufficient to allow follow up by
                        the online platform or the Commission; and
                            (iv) reasonable measures to prevent
                        circumvention of such verification requirements
                        through the use of any false, stolen, or
                        synthetic identity.
                    (B) An active impersonation detection and
                mitigation program.
                    (C) Automated and manual fraudulent and deceptive
                commercial advertisement detection systems.
                    (D) A clear and conspicuous tool for users to
                report suspected fraudulent or deceptive commercial
                advertisements.
            (2) Investigation of fraudulent or deceptive commercial
        advertisements.--
                    (A) In general.--If a person (including a
                government entity) reports a fraudulent or deceptive
                commercial advertisement or the detection system of an
                online platform identifies a fraudulent or deceptive
                commercial advertisement, the online platform shall--
                            (i) not later than 72 hours after the
                        submission of such report or receiving such
                        identification, conduct an investigation of
                        such advertisement; and
                            (ii) not later than 24 hours after
                        concluding the investigation, if applicable,
                        notify the person of the outcome of such
                        investigation.
                    (B) Removal.--
                            (i) After investigation.--If, after
                        conducting an investigation under subparagraph
                        (A), an online platform determines that an
                        advertisement violates the requirements of this
                        Act, such online platform shall, not later than
                        24 hours after making such determination,
                        remove the advertisement from the platform.
                            (ii) During investigation.--Nothing in this
                        subparagraph shall preclude an online platform
                        from removing an advertisement prior to the
                        conclusion of an investigation under
                        subparagraph (A), as determined appropriate by
                        the online platform.
            (3) Presumed compliance.--
                    (A) In general.--For purposes of subsection (a), an
                online platform shall be presumed to have taken
                reasonable steps to prevent a fraudulent or deceptive
                commercial advertisement from being made available if
                the online platform--
                            (i) submits to the Commission a fraudulent
                        and deceptive commercial advertisement
                        detection program that incorporates the
                        procedures described in paragraph (1), and the
                        Commission approves such program; and
                            (ii) demonstrates compliance with, and
                        active enforcement of, the program described in
                        clause (i), including by demonstrating that the
                        online platform provides adequate resources for
                        the program.
                    (B) Rule of construction.--Nothing in this
                paragraph shall be construed to create a presumption of
                compliance in any individual enforcement action in
                which the Commission determines or establishes that the
                online platform did not comply with its fraudulent and
                deceptive commercial advertisement detection program.
    (c) Regulations.--
            (1) In general.--Not later than 1 year after the date of
        enactment of this section, the Commission shall promulgate
        regulations in accordance with section 553 of title 5, United
        States Code, to implement this section.
            (2) Updates.--The Commission shall review the regulations
        promulgated under paragraph (1) on an annual basis and revise
        such regulations as appropriate.
    (d) Enforcement by the Commission.--
            (1) Unfair or deceptive acts or practices.--A violation of
        this Act or a regulation promulgated under this Act shall be
        treated as a violation of a rule defining an unfair or
        deceptive act or practice prescribed under section 18(a)(1)(B)
        of the Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)).
            (2) Powers of the commission.--
                    (A) In general.--The Commission shall enforce this
                Act and any regulation promulgated under this Act in
                the same manner, by the same means, and with the same
                jurisdiction, powers, and duties as though all
                applicable terms and provisions of the Federal Trade
                Commission Act (15 U.S.C. 41 et seq.) were incorporated
                into and made a part of this Act.
                    (B) Privileges and immunities.--Any person who
                violates this Act or any regulation promulgated under
                this Act shall be subject to the penalties and entitled
                to the privileges and immunities provided in the
                Federal Trade Commission Act (15 U.S.C. 41 et seq.).
                    (C) Authority preserved.--Nothing in this Act shall
                be construed to limit the authority of the Commission
                under any other provision of law.
    (e) Enforcement by States.--
            (1) Authorization.--In any case in which the attorney
        general of a State has reason to believe that an interest of
        the residents of the State has been or is threatened or
        adversely affected by the engagement of any person in an act or
        practice that violates subsection (a) or (b), the attorney
        general of the State may, as parens patriae, bring a civil
        action on behalf of the residents of the State in a district
        court of the United States of appropriate jurisdiction to--
                    (A) enjoin such act or practice;
                    (B) enforce compliance with subsection (a) or (b);
                    (C) obtain damages, restitution, or other
                compensation on behalf of residents of the State; or
                    (D) obtain such other relief as the court may
                consider to be appropriate.
            (2) Rights of the commission.--
                    (A) Notice to the commission.--
                            (i) In general.--Except as provided in
                        clause (iii), before initiating a civil action
                        under paragraph (1), the attorney general of a
                        State shall notify the Commission in writing
                        that the attorney general intends to bring such
                        civil action.
                            (ii) Contents.--The notification required
                        by clause (i) shall include a copy of the
                        complaint to be filed to initiate the civil
                        action.
                            (iii) Exception.--If it is not feasible for
                        the attorney general of a State to provide the
                        notification required by clause (i) before
                        initiating a civil action under paragraph (1),
                        the attorney general shall notify the
                        Commission immediately upon instituting the
                        civil action.
                    (B) Intervention by the commission.--Upon receiving
                the notice required by subparagraph (A)(i), the
                Commission may intervene in the civil action and, upon
                intervening--
                            (i) be heard on all matters arising in the
                        civil action; and
                            (ii) file petitions for appeal of a
                        decision in the civil action.
            (3) Investigatory powers.--Nothing in this subsection may
        be construed to prevent the attorney general of a State from
        exercising the powers conferred on the attorney general by the
        laws of the State to conduct investigations, to administer
        oaths or affirmations, or to compel the attendance of witnesses
        or the production of documentary or other evidence.
            (4) Preemptive action by the commission.--If the Commission
        has instituted a civil action for a violation of subsection (a)
        or (b), no State officer may bring an action under paragraph
        (1) during the pendency of that action against any defendant
        named in the complaint of the Commission for any violation of
        subsection (a) or (b) alleged in the complaint.
            (5) Venue; service of process.--
                    (A) Venue.--Any action brought under paragraph (1)
                may be brought in the district court of the United
                States that meets applicable requirements relating to
                venue under section 1391 of title 28, United States
                Code.
                    (B) Service of process.--In an action brought under
                paragraph (1), process may be served in any district in
                which the defendant--
                            (i) is an inhabitant; or
                            (ii) may be found.
    (f) Private Right of Action.--
            (1) In general.--A person who has been injured by another
        person in violation of subsection (a) or (b) may bring a civil
        action against such person in an appropriate district court of
        the United States--
                    (A) seeking injunctive relief;
                    (B) subject to paragraph (2), to obtain actual
                damages; and
                    (C) to obtain, for each violation, any other
                restitution, penalties, and other legal or equitable
                relief as the court may deem just and proper.
            (2) Willful or knowing violations.--If the court finds that
        the defendant acted willfully or knowingly in committing a
        violation described in paragraph (1), the court may, in its
        discretion, increase the amount of the award to an amount equal
        to not more than 3 times the amount available under paragraph
        (1)(B).
            (3) Costs and attorney's fees.--The court shall award to a
        prevailing plaintiff in an action under this subsection the
        litigation costs of such action and reasonable attorney's fees,
        as determined by the court.
            (4) Limitation.--An action may be commenced under this
        subsection not later than 5 years after the date on which the
        person first discovered or had a reasonable opportunity to
        discover the violation.
            (5) Nonexclusive remedy.--Bringing a civil action under
        this subsection shall be in addition to any other remedy
        available to the person bringing such civil action.
    (g) Relationship to Other Laws.--
            (1) Effect of other laws.--
                    (A) Application of section 230(c)(1).--Section
                230(c)(1) of the Communications Act of 1934 (47 U.S.C.
                230(c)(1)) shall not apply to any violation of this
                section.
                    (B) Application of section 230(c)(2).--Nothing in
                this Act shall be construed to limit or affect the
                civil liability protections under section 230(c)(2) of
                the Communications Act of 1934 (47 U.S.C. 230(c)(2)).
            (2) Effect on state laws.--Nothing in this section or any
        regulation promulgated under this section shall preempt or
        otherwise affect any State or local law.
            (3) Severability.--If any provision of this section, or the
        application thereof to any person or circumstance, is held
        invalid, the remainder of this section and the application of
        such provision to other persons not similarly situated or to
        other circumstances shall not be affected by the invalidation.

SEC. 4. REGULATORY REPORT ON ONLINE SCAMS AND POTENTIAL FOR ADDITIONAL
              RULEMAKING.

    (a) Report Required.--Not later than 9 months after the date of
enactment of this section, the Commission, in consultation with other
Federal agencies, shall submit to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial Services
of the House of Representatives a report assessing whether additional
statutory authority is needed to prevent the proliferation of online
scams involving financial transactions.
    (b) Contents.--The report required under subsection (a) shall
include--
            (1) an assessment of any regulatory gaps that allow online
        scams involving fraudulent advertisements or digital payment
        fraud to persist;
            (2) an analysis of whether improved information-sharing
        mechanisms between online platforms, financial institutions,
        and regulators could reduce consumer losses; and
            (3) recommendations for such legislation and administrative
        action required to strengthen oversight of online platforms or
        intermediaries facilitating scam-related payments.

SEC. 5. DEFINITIONS.

    For purposes of this Act:
            (1) Commission.--The term ``Commission'' means the Federal
        Trade Commission.
            (2) Deceptive.--The term ``deceptive''--
                    (A) has the meaning given the term in section 5 of
                the Federal Trade Commission Act (15 U.S.C. 45);
                    (B) shall be interpreted consistent with any
                guidance of the Commission or precedent of Federal
                courts applying such section; and
                    (C) for purposes of this Act, is limited to
                material misrepresentations, omissions, or practices
                that are likely to cause financial harm to a consumer.
            (3) Online platform.--The term ``online platform'' means
        any public-facing website, online service, online 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 a
        social media service, social network, or virtual reality
        environment.
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