“To prohibit online platforms from displaying fraudulent or deceptive commercial advertisements, and for other purposes.”
No CRS summary available for this bill.
This section sets forth nine congressional findings on online scams and fraud via social media and digital platforms, including FTC data showing $195.9 billion in estimated 2024 fraud losses ($81.5 billion by older adults); social media as the initial contact method for over 38% of victims ages 20-29 and 47% ages 18-19; 2.6 million fraud reports in 2023 with a $500 median loss and nearly 100,000 losses over $10,000; and platforms' inadequate advertiser verification and scam mitigation despite FTC inquiries under section 6(b) of the FTC Act (15 U.S.C. 46(b)).
This section prohibits an online platform from displaying a fraudulent or deceptive commercial advertisement for which it accepted payment unless the platform took reasonable steps to prevent it, including (1) advertiser identity verification procedures (i.e., legal name, physical location, government ID or business documentation, contact information, and anti-circumvention measures); (2) an active impersonation detection and mitigation program; (3) automated and manual detection systems; and (4) a conspicuous user reporting tool. It further requires platforms, upon report or detection of such an ad, to investigate within 72 hours, notify reporters of results within 24 hours thereafter, and remove confirmed violating ads within 24 hours (though platforms may remove ads sooner); establishes a presumption of reasonable steps for platforms with a Commission-approved detection program that they actively enforce with adequate resources (not applicable in individual enforcement actions proving noncompliance); and directs the Federal Trade Commission (FTC) to promulgate implementing regulations within one year of enactment (with annual reviews and revisions as appropriate). This section treats violations as a rule defining an unfair or deceptive act or practice under FTC Act §18(a)(1)(B) (15 U.S.C. §57a(a)(1)(B)), enforceable by the FTC with all existing authorities, privileges, and penalties; authorizes state attorneys general to bring civil parens patriae actions for injunctive relief, compliance, damages, restitution, or other remedies; and preserves all other FTC authorities.
This section directs the Commission, in consultation with other federal agencies, to submit to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services, not later than nine months after enactment, a report assessing whether additional statutory authority is needed to prevent online scams involving financial transactions. The report must include (1) an assessment of regulatory gaps allowing such scams, including fraudulent advertisements and digital payment fraud; (2) an analysis of whether improved information-sharing among online platforms, financial institutions, and regulators could reduce consumer losses; and (3) recommendations for legislation and administrative actions to strengthen oversight of online platforms and intermediaries facilitating scam-related payments.
This section establishes definitions for purposes of the Act. It defines (1) "Commission" as the Federal Trade Commission; (2) "deceptive" as having the meaning given the term in section 5 of the Federal Trade Commission Act (15 U.S.C. 45), consistent with Commission guidance or federal court precedent applying that section, and limited to material misrepresentations, omissions, or practices likely to cause financial harm to a consumer; and (3) "online platform" as any public-facing website, online service, online application, or mobile application that predominantly provides a community forum for user-generated content (e.g., sharing videos, images, games, audio files, or other content), including a social media service, social network, or virtual reality environment.