People who lose money to scam ads often assume the platform will step in quickly — block the ad, refund the loss, or shut the account behind it.
In practice, most discover that reports disappear into automated systems, responses take weeks, and the ad often keeps running.
That gap between expectation and reality is why a new U.S. bill targeting scam advertising has drawn attention. It does not focus on individual scams. Instead, it targets what happens before an ad ever appears — and what platforms are required to do once harm is reported.
Why this issue is surfacing now
The immediate trigger is new bipartisan legislation introduced by U.S. Senators Ruben Gallego and Bernie Moreno, aimed at forcing social media platforms to verify who is paying for ads.
The proposal follows reporting showing that fraudulent ads — investment scams, fake stores, impersonation schemes — have become routine across large platforms such as Meta Platforms. For regulators, the question is no longer whether scams exist, but whether the systems allowing them to run are failing at a structural level.
What actually happens today when a scam ad appears
When a fraudulent ad goes live, several things typically happen in sequence.
First, the ad is approved automatically. Most platforms rely on automated checks that review images, keywords, and known signals, not the advertiser’s real-world identity. If nothing flags immediately, the ad runs.
Second, users begin reporting the ad. These reports usually trigger a queue-based review, not immediate removal. The same ad can continue running while the review is pending, especially if it has multiple variations or accounts behind it.
Third, enforcement — if it happens — is fragmented. One ad may be removed while similar ads from the same advertiser continue. Account bans are often delayed, and identity verification may never occur unless the platform chooses to escalate internally.
For users, this feels like inaction. For platforms, it is a workflow problem — one built around speed and scale rather than identity certainty.
Where people assume protection exists — and where it breaks down
Many users assume platforms are already required to confirm who advertisers are. In reality, verification is inconsistent and often optional, depending on ad category or jurisdiction.
Another common assumption is that reporting a scam ad triggers a legal obligation to act. In practice, platforms have broad discretion over how quickly they respond, what qualifies as fraud, and whether user losses are addressed at all.
The breakdown usually occurs at the identity stage. If a platform does not know who is behind an ad in a legally verifiable way, enforcement becomes reactive instead of preventative — chasing ads after damage has already occurred.
What the proposed SCAM Act would change in practice
If enacted, the Safeguarding Consumers from Advertising Misconduct Act would alter the process before ads run and after scams are reported.
Platforms would be required to take “reasonable steps” to verify advertisers using government-issued identification or proof of a business’s legal existence. This verification would occur before ads are approved, not only after problems arise.
The bill also formalises response expectations. Platforms would be expected to review and act on scam reports from users or authorities, rather than treating them as discretionary moderation issues.
Crucially, enforcement would not rely on private lawsuits by users. Non-compliance would be treated as a potential unfair or deceptive practice, enforceable by the Federal Trade Commission and state attorneys general.
A realistic example of how this could play out
Consider a small business owner scrolling through social media who clicks an ad for a high-yield investment platform. The site looks legitimate, deposits are accepted, and funds disappear within days.
Under current systems, reporting the ad may lead to removal weeks later, with no clarity about who ran it. Under the proposed framework, that ad should not have run unless the advertiser had already passed identity checks.
If the ad still appeared and harm occurred, regulators would not need to prove the platform intentionally enabled fraud. They would examine whether required verification and response steps were followed — and whether failures occurred at specific decision points.
The outcome might still be unresolved for the victim. But the accountability pathway would be clearer, and the platform’s internal process would be subject to external review.
Why resolution still wouldn’t be instant
Even with stricter rules, delays would remain.
Verification systems take time to build and operate. Bad actors often adapt quickly, using shell companies or stolen credentials. Platforms would still exercise discretion in determining what qualifies as “reasonable steps.”
Importantly, the bill does not guarantee scam prevention or compensation. It reshapes responsibility and oversight, not outcomes. Users could still experience harm, but the process governing how ads are approved and reviewed would no longer be opaque.
How this is typically handled under existing law
At present, scam advertising is addressed indirectly through consumer protection rules and platform policies. Liability generally depends on whether a company engaged in unfair or deceptive practices — a standard that is fact-specific and difficult to apply to automated ad systems.
The proposed legislation narrows that gap by tying responsibility to procedural compliance rather than intent. Whether a violation occurred would depend on what verification steps were required, whether they were followed, and where breakdowns occurred.
That distinction matters. It shifts scrutiny from what platforms say they do to what their systems actually require in practice.
What remains unresolved
The bill has been introduced, not enacted. Its standards would need to be interpreted, enforced, and tested over time. Platforms argue that verification alone cannot eliminate scams, and regulators acknowledge it is not a complete solution.
What the proposal does make clear is where expectations diverge from reality. Understanding that gap — and how responsibility is assessed when systems fail — is the core issue this debate exposes.
