“A bill to prohibit online platforms from displaying fraudulent or deceptive commercial advertisements, and for other purposes.”
No CRS summary available for this bill.
This section states nine congressional findings on the prevalence of online scams via social media platforms (e.g., fake giveaways, AI-cloned impersonations), 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 scams reported by ages 20-29 and 47% by ages 18-19, 2.6 million AARP-reported fraud complaints in 2023 with a $500 median loss, platforms' reduced advertiser verification, overly broad interpretations of Section 230 immunity, and the FTC's use of its Section 6(b) authority (15 U.S.C. 46(b)) to probe ad screening amid a consumer confidence crisis.
This section prohibits an online platform from displaying a fraudulent or deceptive commercial advertisement if the platform accepted payment for it and failed to take reasonable steps to prevent it. Reasonable steps include (1) verifying each advertiser's identity, legal name, physical location, government-issued ID (or business documentation), and contact information, with measures against false identities; (2) maintaining an active impersonation detection and mitigation program; (3) using automated and manual detection systems for fraudulent ads; and (4) providing a conspicuous user reporting tool. Upon receiving a report or detection alert, the platform must investigate within 72 hours, notify the reporter of results within 24 hours thereafter, and remove violating ads within 24 hours of determination (though removal may occur sooner). This section establishes a presumption of reasonable steps—and thus compliance—if the platform submits its detection program incorporating these procedures to the Federal Trade Commission (FTC) for approval and demonstrates ongoing enforcement with adequate resources. (No such presumption applies if the FTC finds noncompliance in an enforcement action.) This section directs the FTC to promulgate implementing regulations under APA notice-and-comment procedures within one year of enactment, with annual reviews and revisions as needed. This section treats violations as unfair or deceptive acts under FTC Act §18(a)(1)(B) (15 U.S.C. 57a(a)(1)(B)), authorizing FTC enforcement with full FTC Act powers, penalties, privileges, and immunities. It further authorizes state attorneys general to bring parens patriae civil actions for injunctions, compliance, damages, restitution, or other relief.
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 9 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 online scams involving fraudulent advertisements or digital payment fraud to persist, (2) an analysis of whether improved information-sharing between online platforms, financial institutions, and regulators could reduce consumer losses, and (3) recommendations for legislation and administrative actions to strengthen oversight of online platforms or intermediaries facilitating scam-related payments.
This section establishes definitions for purposes of the Act: (1) "Commission" as the Federal Trade Commission; (2) "deceptive" as having the meaning given 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.