WASHINGTON — Today, Representative Lou Correa (CA-46), alongside Rep. Dan Meuser (PA-09), introduced the Safeguarding Consumers from Advertising Misconduct (SCAM) Act to combat predatory online scam advertisements. The bill has a Senate companion introduced by Senators Ruben Gallego (D-AZ) and Bernie Moreno (R-OH).
Online platforms have become a primary channel for scams and digital advertising fraud, including fake giveaways, fraudulent animal sales, ads for nonexistent products, government impersonation schemes, romance and health scams, and sophisticated impersonations using AI-cloned voices and stolen images that target consumers and legitimate businesses. According to the Federal Trade Commission, fraud losses in 2024 are estimated at $195.9 billion, including $81.5 billion lost by older adults.
“Every day, millions of hard-working American taxpayers on Main Street are falling…
Investment fraud targets the human desire for financial growth by promising high returns with “low to no risk.”
- Ponzi Schemes: Named after Charles Ponzi, these schemes pay “returns” to earlier investors using the capital brought in by newer investors. There is no actual underlying business; the system collapses when new recruitment slows down.
- Pyramid Schemes: Similar to Ponzi schemes, but participants are usually required to sell a product or service. The primary “profit” comes from the recruitment fees of new members rather than actual product sales.
- Pump and Dump: Fraudsters spread false, positive rumors about a cheap stock (the “pump”) to drive up the price. Once the price peaks, they sell their shares (the “dump”), leaving other investors with worthless stock.