US Lawmakers Propose SCAM Act to Require Advertiser Verification

U.S. Senators Ruben Gallego and Bernie Moreno have introduced bipartisan legislation aimed at reducing online scams by requiring social media platforms to verify their advertisers.

The proposed law, called the Safeguarding Consumers from Advertising Misconduct Act (SCAM Act), would obligate platforms to take “reasonable steps” to prevent fraudulent advertising or face potential legal action from the Federal Trade Commission (FTC) and state attorneys general.

The bill follows growing concern that major platforms profit from scam advertising. A Reuters investigation published in November reported that internal Meta documents estimated the company could generate around 10% of its 2024 revenue—approximately $16 billion—from ads linked to scams and other illicit products. After the report, U.S. Senators Josh Hawley and Richard Blumenthal urged the FTC and the Securities and Exchange Commission to investigate Meta over illegal advertising practices.

Under the proposed legislation, social media companies would be required to verify government-issued identification for individual advertisers and confirm the legal existence of businesses. Platforms would also need to quickly review and act on scam reports submitted by users or government authorities. Failure to comply would be treated as a violation of federal rules prohibiting unfair or deceptive business practices.

Meta has disputed the claim that a large share of its revenue comes from scam-related ads, saying its internal estimates overstated the problem. The company says it actively fights fraud and works with regulators on anti-scam initiatives. However, the bill’s text argues that some platforms have weakened advertiser verification in order to avoid losing advertising revenue, even as online platforms have become a primary channel for digital fraud.

Why is it important for affiliates?

There are several reasons why it’s so crucial for affiliate marketers:

Stricter advertiser verification: Affiliates may be required to provide stronger identity and business documentation to advertise on major platforms.
Higher compliance standards: Affiliates promoting financial services, crypto, or gambling-related offers could face closer scrutiny of creatives, landing pages, and claims.
Reduced competition from scammers: Legitimate affiliates may benefit if fake advertisers and scam operations are removed from ad ecosystems.
Potential cost increases: More compliance checks could increase onboarding time and operational costs for affiliates.
Greater platform accountability: Platforms may become more cautious about approving offers, making traffic quality and transparency more important than ever.