As long as fraudulent ads continue to drive revenue for social media platforms without consequence, more must be done to protect consumers, American Bankers Association President and CEO Rob Nichols said in a letter in support of legislation to crack down on social media scams.
The Safeguarding Consumers from Advertising Misconduct, or SCAM, Act would require social media companies to verify advertisers’ identity, implement systems to detect fraudulent advertisements, and investigate and remove fake ads. ABA previously expressed support for the Senate version of the bill. In a letter to sponsors of the House version, Nichols called the legislation “a critical new weapon in the fight against fraud and scams.”
“No sector invests more to protect Americans from fraud and scams than the banking industry, which expends significant resources on fraud prevention, detection and recovery. But banks cannot solve this problem alone,” Nichols said. “When social media companies perform minimal, if any, vetting of the advertisements placed on their networks, criminals can exploit these platforms to impersonate banks and other legitimate companies and gain consumers’ trust.”
“For too long, the social media scam ecosystem has been generating profits for social media platforms,” he added. “Under the SCAM Act, a greater volume of scams will no longer mean greater revenue.”
