"Without meaningful deterrents, Big Tech companies will do what's profitable, regardless of the cost to consumers. But a new bipartisan bill could add a check that would make them think twice, at least in one area. On Wednesday, Senators Ruben Gallego (D-AZ) and Bernie Moreno (R-OH) introduced legislation that would require social platforms to crack down on scam ads. The Safeguarding Consumers from Advertising Misconduct (SCAM) Act would require platforms to take reasonable steps to prevent fraudulent or deceptive ads that they profit from."
"The backdrop to the SCAM Act is a Reuters report from last November. Meta reportedly estimated that up to 10 percent of its 2024 revenue came from scam ads. The company is said to have calculated that as much as $16 billion of its revenue that year was from scams, including "fraudulent e-commerce and investment schemes, illegal online casinos and the sale of banned medical products." Making matters worse, Meta reportedly refused to block small fraudsters until their ads were flagged at least eight times."
"Meanwhile, bigger spenders were said to have accrued at least 500 strikes without being removed. Executives reportedly wrestled with how to get the problem under control - but only without affecting the company's bottom line. At one point, managers were told not to take any action that could cost Meta more than 0.15 percent of its total revenue. (See what I mean about needing meaningful deterrents?)"
The Safeguarding Consumers from Advertising Misconduct (SCAM) Act would require social platforms to take reasonable steps to prevent fraudulent or deceptive ads they profit from, and would allow the Federal Trade Commission and state attorneys general to bring civil actions against noncompliant platforms. Reuters reported that Meta estimated up to 10 percent of 2024 revenue—about $16 billion—came from scam ads including fraudulent e-commerce, illegal online casinos, investment schemes, and banned medical products. Meta reportedly delayed blocking small fraudsters until ads were flagged multiple times, allowed large advertisers to accrue hundreds of strikes, and limited actions that might reduce revenue, prompting calls for stronger deterrents. The FTC estimated Americans' fraud losses in 2024 at nearly $19 billion, with seniors accounting for an estimated $81.5 billion of that total.
Read at Engadget
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