,,ii #aaith ,,congress #b;d ,session ,s4 #cggd ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,february #d1 #bjbf,mr4 ,gallego 7for himself and ,mr4 ,moreno7 introduced the following bill2 which was read twice and referred to the ,committee on ,commerce1 ,science1 and ,transportation ,a ,,bill ,to prohibit online platforms from displaying fraudulent or deceptive commercial advertisements1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,safeguarding ,consumers from ,advertising ,misconduct ,act or the ,,scam ,act4 #b4 ,findings ,congress finds the following3 7#a7 ,online platforms have become a primary conduit for online scams or other digital advertising-related fraud1 including fake giveaways1 animal sales1 deal advertisements tied to nonexistent products1 government impersonations1 romance scams1 health scams1 and impersonations using ,,ai-cloned voices and stolen images targeting legitimate businesses4 7#b7 ,according to data reported by the ,federal ,trade ,commission1 social media platforms are a primary contact method to initiate scams1 with individuals ages #bj to #bi reporting social media was the contact method more than #ch percent of the time1 and for individuals ages #ah to #ai1 that figure was #dg percent4 7#c7 ,according to the ,commission1 the estimated overall loss from fraud in #bjbd1 adjusted to account for underreporting1 was #aie1ijj1jjj1jjj1 with an estimated #ha1ejj1jjj1jjj lost by older adults4 7#d7 ,according to the ,,aarp1 consumers filed #b1fjj1jjj fraud reports in #bjbc1 with a median individual loss of #ejj4 ,nearly #ajj1jjj consumers reported losses of #aj1jjj or more4 7#e7 ,some online platforms have abandoned tighter advertiser verification processes to avoid driving away profits from advertisers4 7#f7 ,section #bcj of the ,communications ,act of #aicd 7#dg ,u4,s4,c4 #bcj7 was enacted to protect online platforms acting as ,good ,samaritans by shielding such platforms from being treated as publishers of user content1 while encouraging such platforms to block or screen offensive content4 7#g7 ,courts have interpreted ,section #bcj too broadly1 granting sweeping immunity even to online platforms alleged to facilitate unlawful or harmful activity and including online activities that did not exist in #aiif--;an outcome contrary to ,congress's original intent4 7#h7 ,according to the ,federal ,trade ,commission's consumer alert titled ,top scams of #bjbd 7,march #aj1 #bjbe71 ,people reported losing money more often when contacted through social media4 ,most people 7#gj percent7 reported a loss when contacted on a social media platform--and lost more money overall4 ,the ,commission issued broad information requests to online platforms using the ,commission's authority under section #f7;b7 of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #df7;b77 in order to assess paid advertisement screening practices1 citing the surge in scam ads4 7#i7 ,online platforms' inconsistent and optional efforts to mitigate the rise in scams have failed1 leading to a consumer confidence crisis across digital financial systems4 #c4 ,prohibition on digital advertising-related fraud 7a7 ,in general ,it shall be unlawful for an online platform to display a fraudulent or deceptive commercial advertisement on such platform if the online platform-- 7#a7 accepted payment to display such advertisement2 and 7#b7 failed to take reasonable steps 7as described in subsection 7b77 to prevent the fraudulent or deceptive commercial advertisement from being made available4 7b7 ,additional requirements for online platforms 7#a7 ,required procedures ,an online platform that accepts payment1 or any other form of compensation1 to display an advertisement shall establish and implement procedures to require the following3 7,a7 ,procedures to verify the identity of each advertiser prior to the placement of a paid advertisement1 including-- 7i7 verification of the legal name and physical location of the advertiser2 7ii7 verification of a valid and current government-issued identification of the advertiser1 or1 in the case of a business entity1 documentation establishing the legal existence of the entity and the relation of the purchaser to the entity2 7iii7 collection of contact information for the advertiser sufficient to allow follow up by the online platform or the ,commission2 and 7iv7 reasonable measures to prevent circumvention of such verification requirements through the use of any false1 stolen1 or synthetic identity4 7,b7 ,an active impersonation detection and mitigation program4 7,c7 ,automated and manual fraudulent and deceptive commercial advertisement detection systems4 7,d7 ,a clear and conspicuous tool for users to report suspected fraudulent or deceptive commercial advertisements4 7#b7 ,investigation of fraudulent or deceptive commercial advertisements 7,a7 ,in general ,if a person 7including a government entity7 reports a fraudulent or deceptive commercial advertisement or the detection system of an online platform identifies a fraudulent or deceptive commercial advertisement1 the online platform shall-- 7i7 not later than #gb hours after the submission of such report or receiving such identification1 conduct an investigation of such advertisement2 and 7ii7 not later than #bd hours after concluding the investigation1 if applicable1 notify the person of the outcome of such investigation4 7,b7 ,removal 7i7 ,after investigation ,if1 after conducting an investigation under subparagraph 7,a71 an online platform determines that an advertisement violates the requirements of this ,act1 such online platform shall1 not later than #bd hours after making such determination1 remove the advertisement from the platform4 7ii7 ,during investigation ,nothing in this subparagraph shall preclude an online platform from removing an advertisement prior to the conclusion of an investigation under subparagraph 7,a71 as determined appropriate by the online platform4 7#c7 ,presumed compliance 7,a7 ,in general ,for purposes of subsection 7a71 an online platform shall be presumed to have taken reasonable steps to prevent a fraudulent or deceptive commercial advertisement from being made available if the online platform-- 7i7 submits to the ,commission a fraudulent and deceptive commercial advertisement detection program that incorporates the procedures described in paragraph 7#a71 and the ,commission approves such program2 and 7ii7 demonstrates compliance with1 and active enforcement of1 the program described in clause 7i71 including by demonstrating that the online platform provides adequate resources for the program4 7,b7 ,rule of construction ,nothing in this paragraph shall be construed to create a presumption of compliance in any individual enforcement action in which the ,commission determines or establishes that the online platform did not comply with its fraudulent and deceptive commercial advertisement detection program4 7c7 ,regulations 7#a7 ,in general ,not later than #a year after the date of enactment of this section1 the ,commission shall promulgate regulations in accordance with section #eec of title #e1 ,united ,states ,code1 to implement this section4 7#b7 ,updates ,the ,commission shall review the regulations promulgated under paragraph 7#a7 on an annual basis and revise such regulations as appropriate4 7d7 ,enforcement by the ,commission 7#a7 ,unfair or deceptive acts or practices ,a violation of this ,act or a regulation promulgated under this ,act shall be treated as a violation of a rule defining an unfair or deceptive act or practice prescribed under section #ah7;a77#a77;,b7 of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #eg;a7a77#a77;,b774 7#b7 ,powers of the ,commission 7,a7 ,in general ,the ,commission shall enforce this ,act and any regulation promulgated under this ,act in the same manner1 by the same means1 and with the same jurisdiction1 powers1 and duties as though all applicable terms and provisions of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #da et seq47 were incorporated into and made a part of this ,act4 7,b7 ,privileges and immunities ,any person who violates this ,act or any regulation promulgated under this ,act shall be subject to the penalties and entitled to the privileges and immunities provided in the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #da et seq474 7,c7 ,authority preserved ,nothing in this ,act shall be construed to limit the authority of the ,commission under any other provision of law4 7e7 ,enforcement by ,states 7#a7 ,authorization ,in any case in which the attorney general of a ,state has reason to believe that an interest of the residents of the ,state has been or is threatened or adversely affected by the engagement of any person in an act or practice that violates subsection 7a7 or 7b71 the attorney general of the ,state may1 as parens patriae1 bring a civil action on behalf of the residents of the ,state in a district court of the ,united ,states of appropriate jurisdiction to-- 7,a7 enjoin such act or practice2 7,b7 enforce compliance with subsection 7a7 or 7b72 7,c7 obtain damages1 restitution1 or other compensation on behalf of residents of the ,state2 or 7,d7 obtain such other relief as the court may consider to be appropriate4 7#b7 ,rights of the ,commission 7,a7 ,notice to the ,commission 7i7 ,in general ,except as provided in clause 7iii71 before initiating a civil action under paragraph 7#a71 the attorney general of a ,state shall notify the ,commission in writing that the attorney general intends to bring such civil action4 7ii7 ,contents ,the notification required by clause 7i7 shall include a copy of the complaint to be filed to initiate the civil action4 7iii7 ,exception ,if it is not feasible for the attorney general of a ,state to provide the notification required by clause 7i7 before initiating a civil action under paragraph 7#a71 the attorney general shall notify the ,commission immediately upon instituting the civil action4 7,b7 ,intervention by the ,commission ,upon receiving the notice required by subparagraph 7,a77i71 the ,commission may intervene in the civil action and1 upon intervening-- 7i7 be heard on all matters arising in the civil action2 and 7ii7 file petitions for appeal of a decision in the civil action4 7#c7 ,investigatory powers ,nothing in this subsection may be construed to prevent the attorney general of a ,state from exercising the powers conferred on the attorney general by the laws of the ,state to conduct investigations1 to administer oaths or affirmations1 or to compel the attendance of witnesses or the production of documentary or other evidence4 7#d7 ,preemptive action by the ,commission ,if the ,commission has instituted a civil action for a violation of subsection 7a7 or 7b71 no ,state officer may bring an action under paragraph 7#a7 during the pendency of that action against any defendant named in the complaint of the ,commission for any violation of subsection 7a7 or 7b7 alleged in the complaint4 7#e7 ,venue2 service of process 7,a7 ,venue ,any action brought under paragraph 7#a7 may be brought in the district court of the ,united ,states that meets applicable requirements relating to venue under section #acia of title #bh1 ,united ,states ,code4 7,b7 ,service of process ,in an action brought under paragraph 7#a71 process may be served in any district in which the defendant-- 7i7 is an inhabitant2 or 7ii7 may be found4 7f7 ,private right of action 7#a7 ,in general ,a person who has been injured by another person in violation of subsection 7a7 or 7b7 may bring a civil action against such person in an appropriate district court of the ,united ,states-- 7,a7 seeking injunctive relief2 7,b7 subject to paragraph 7#b71 to obtain actual damages2 and 7,c7 to obtain1 for each violation1 any other restitution1 penalties1 and other legal or equitable relief as the court may deem just and proper4 7#b7 ,willful or knowing violations ,if the court finds that the defendant acted willfully or knowingly in committing a violation described in paragraph 7#a71 the court may1 in its discretion1 increase the amount of the award to an amount equal to not more than #c times the amount available under paragraph 7#a77;,b74 7#c7 ,costs and attorney's fees ,the court shall award to a prevailing plaintiff in an action under this subsection the litigation costs of such action and reasonable attorney's fees1 as determined by the court4 7#d7 ,limitation ,an action may be commenced under this subsection not later than #e years after the date on which the person first discovered or had a reasonable opportunity to discover the violation4 7#e7 ,nonexclusive remedy ,bringing a civil action under this subsection shall be in addition to any other remedy available to the person bringing such civil action4 7g7 ,relationship to other laws 7#a7 ,effect of other laws 7,a7 ,application of section #bcj7;c77#a7 ,section #bcj7;c77#a7 of the ,communications ,act of #aicd 7#dg ,u4,s4,c4 #bcj7;c77#a77 shall not apply to any violation of this section4 7,b7 ,application of section #bcj7;c77#b7 ,nothing in this ,act shall be construed to limit or affect the civil liability protections under section #bcj7;c77#b7 of the ,communications ,act of #aicd 7#dg ,u4,s4,c4 #bcj7;c77#b774 7#b7 ,effect on ,state laws ,nothing in this section or any regulation promulgated under this section shall preempt or otherwise affect any ,state or local law4 7#c7 ,severability ,if any provision of this section1 or the application thereof to any person or circumstance1 is held invalid1 the remainder of this section and the application of such provision to other persons not similarly situated or to other circumstances shall not be affected by the invalidation4 #d4 ,regulatory report on online scams and potential for additional rulemaking 7a7 ,report required ,not later than #i months after the date of enactment of this section1 the ,commission1 in consultation with other ,federal agencies1 shall submit to the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,financial ,services of the ,house of ,representatives a report assessing whether additional statutory authority is needed to prevent the proliferation of online scams involving financial transactions4 7b7 ,contents ,the report required under subsection 7a7 shall include-- 7#a7 an assessment of any regulatory gaps that allow online scams involving fraudulent advertisements or digital payment fraud to persist2 7#b7 an analysis of whether improved information-sharing mechanisms between online platforms1 financial institutions1 and regulators could reduce consumer losses2 and 7#c7 recommendations for such legislation and administrative action required to strengthen oversight of online platforms or intermediaries facilitating scam-related payments4 #e4 ,definitions ,for purposes of this ,act3 7#a7 ,commission ,the term ,commission means the ,federal ,trade ,commission4 7#b7 ,deceptive ,the term deceptive-- 7,a7 has the meaning given the term in section #e of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #de72 7,b7 shall be interpreted consistent with any guidance of the ,commission or precedent of ,federal courts applying such section2 and 7,c7 for purposes of this ,act1 is limited to material misrepresentations1 omissions1 or practices that are likely to cause financial harm to a consumer4 7#c7 ,online platform ,the term online platform means any public-facing website1 online service1 online application1 or mobile application that predominantly provides a community forum for user-generated content1 such as sharing videos1 images1 games1 audio files1 or other content1 including a social media service1 social network1 or virtual reality environment4