Major technology firms prioritize profits over user protection unless strong measures are in place. A recently proposed cross-party measure might introduce such oversight in a specific domain. Senators Ruben Gallego, a Democrat from Arizona, and Bernie Moreno, a Republican from Ohio, unveiled the bill on Wednesday, mandating that social media sites address deceptive advertising.
Under the Safeguarding Consumers from Advertising Misconduct Act, or SCAM Act, online platforms must implement appropriate measures to block misleading or scam-related promotions from which they earn income. Failure to comply could lead to lawsuits from the Federal Trade Commission and state legal authorities.
This proposal stems from a November Reuters investigation. According to the report, Meta projected that fraudulent advertisements could account for as much as 10% of its 2024 earnings. Estimates suggested that scams contributed up to $16 billion to the company's income that year, encompassing fake online retail and investment opportunities, unlicensed gambling sites, and prohibited health items.
Compounding the issue, Meta allegedly delayed banning minor scammers until their promotions received at least eight complaints. Larger advertisers reportedly continued despite accumulating over 500 violations without suspension. Company leaders apparently debated solutions to curb the issue while safeguarding financial performance, with instructions to avoid steps that might reduce overall revenue by more than 0.15%.
The Federal Trade Commission reports that fraud cost Americans close to $19 billion in 2024, factoring in unreported incidents. Seniors alone accounted for an estimated $81.5 billion in those losses.
"Platforms earning revenue from site advertisements bear the duty to ensure such content is not deceptive," Senator Gallego stated. "Our cross-aisle proposal ensures social media firms face consequences and shields users' finances in digital spaces."
"Safeguarding U.S. consumers against misleading promotions and opportunistic scammers exploiting regulatory gaps is essential," Senator Moreno remarked. "We must act as social media operations deliberately facilitate fraud against citizens for profit."