The SCAM Act: What Lead Generation Companies and Insurance Agents Need to Know About Social Media Advertiser Verification
TCPA-Style Litigation Incentives Are Coming to Digital Advertising. Here’s How to Prepare.
If you buy or sell leads and advertise on social media, a new bill introduced in the U.S. Senate on February 4, 2026, should be on your radar. The Safeguarding Consumers from Advertising Misconduct Act—the SCAM Act—would require social media platforms to verify every paid advertiser’s identity before running their ads. And if those ads turn out to be deceptive, the consequences look a lot like the TCPA litigation model that the lead generation industry already knows too well.
The bill, introduced by Senators Ruben Gallego (D-AZ) and Bernie Moreno (R-OH), is a bipartisan response to what the FTC estimates was $195.9 billion in fraud losses in 2024. It has already secured endorsements from the American Bankers Association and AARP. While the bill’s primary target is social media platforms, its ripple effects will reach every company that runs paid advertising on those platforms—including lead generation companies, insurance agencies, and the technology platforms that serve them.
This article breaks down what the SCAM Act requires, why it matters for your specific business, and what you should be doing now to prepare—regardless of whether this particular bill becomes law. Tracy Volker, VP of Integrishield, said it best when she said “The SCAM Act reinforces what responsible brands already know, specifically, if your name is in the ad stream, you’re accountable. Proactive monitoring isn’t optional anymore. It’s foundational to brand protection.”
What Is the SCAM Act?
The SCAM Act would make it unlawful for an online platform to display a “fraudulent or deceptive commercial advertisement” if the platform accepted payment for the ad and failed to take “reasonable steps” to prevent it. The bill applies specifically to paid commercial advertisements—not unpaid user-generated content.
The bill defines “deceptive” as “material misrepresentations, omissions, or practices that are likely to cause financial harm to a consumer,” interpreted consistently with FTC guidance and existing federal consumer protection precedent.
Also, while it’s clear that social media giants, like Meta and Google, are the main targets here, the broad definition of “online platforms” will encompass so many more companies. The SCAM Act defines “online platforms” as “any public-facing website, online service, online application, or mobile application that predominantly provides a community forum for user generated content, such as sharing videos, images, games, audio files, or other content, including a so24 cial media service, social network, or virtual reality environment.”
Additionally, the SCAM Act will prevent these online platforms from hiding behind Section 230 for violations of the SCAM Act. The SCAM Act specifically eliminates the Section 230 protections.
Advertiser Verification Requirements
Under the bill, any online platform that accepts payment to display ads must verify every advertiser before running their content. The required verification includes:
Verification of the advertiser’s legal name and physical location
Verification of a valid, current government-issued ID—or, for business entities, documentation establishing the legal existence of the entity and the purchaser’s relationship to it
Collection of contact information sufficient for follow-up by the platform or the FTC
Reasonable measures to prevent circumvention through false, stolen, or synthetic identities
Platforms must also operate active impersonation detection programs, deploy both automated and manual detection systems for deceptive ads, and provide a clear mechanism for users to report suspected scam advertisements.
Investigation and Removal Timelines
When a fraudulent ad is reported—by a user, government entity, or the platform’s own detection systems—the platform must investigate within 72 hours, notify the reporting party within 24 hours of concluding the investigation, and remove the ad within 24 hours of determining it violates the Act.
Enforcement: Three Layers of Accountability
The SCAM Act creates a three-layered enforcement structure that should look familiar to anyone in the TCPA space:
FTC Enforcement. Violations are treated as unfair or deceptive acts under the FTC Act, giving the Commission full enforcement authority including civil penalties.
State Attorney General Enforcement. State AGs can bring civil actions on behalf of their residents for injunctive relief, damages, restitution, and other compensation. The bill requires AGs to notify the FTC before filing—but allows immediate action when delay isn’t feasible.
Private Right of Action. Individuals harmed by violations can file civil lawsuits in federal court seeking injunctive relief, actual damages, and other equitable remedies. Courts may award up to triple damages for willful or knowing violations. And the bill mandates attorney’s fees for prevailing plaintiffs.
If that enforcement structure sounds familiar, it should. Those are the same litigation incentives that have fueled decades of TCPA class action litigation and produced settlements like American Income Life’s $14 million payout.
Why Lead Generation Companies Should Pay Attention
The SCAM Act is aimed at platforms, not advertisers. So why should lead generation companies care? Because the bill’s practical effects will reshape how you operate on those platforms—and because the same regulatory trajectory we’ve seen in TCPA enforcement is now extending to digital advertising.
Your Onboarding Process Is About to Get Longer
If the SCAM Act passes, platforms will need to verify your identity before you can run ads. That means producing government-issued IDs or business formation documents, proving the purchaser’s relationship to the advertising entity, and providing contact information that the FTC can use for follow-up.
For lead generation companies that manage multiple ad accounts, run campaigns across different business entities, or test new offers under different brand names, this verification requirement adds significant friction. The days of spinning up anonymous ad accounts to test campaigns quickly may be numbered. Every account will need a verified identity trail.
Deceptive Advertising Gets Expensive Fast
Lead generation has been under increasing scrutiny for deceptive advertising practices. The FTC’s $145 million in combined settlements against Assurance IQ ($100 million) and MediaAlpha ($45 million) in August 2025 signaled that the agency is making lead generation enforcement a priority. The SCAM Act adds another enforcement vector on top of existing FTC authority.
Consider the practical scenario: A lead generation company runs Facebook ads offering “free insurance quotes” or “government-approved health plans.” If those ads are deemed deceptive under the SCAM Act, the platform faces liability for failing to prevent them—and the platform’s response will be to tighten controls on similar advertisers across the board. Meanwhile, individuals harmed by those ads can pursue private lawsuits against the advertiser with the prospect of treble damages and mandatory attorney’s fees.
The “Consent Chain” Problem Extends to Ad Accounts
If you’ve read our analysis of TCPA consent chain issues and vicarious liability, you know that one of the biggest risks in lead generation is the inability to trace consent back to its source. The SCAM Act creates an analogous problem for advertising.
When a lead generation company runs ads through affiliates, sub-affiliates, or white-label arrangements, the verification trail can break down. If an affiliate runs a deceptive ad under your brand—or under a brand you’re associated with—who bears responsibility? The platform will look to the verified advertiser. And under the SCAM Act’s private right of action, plaintiff’s counsel will look for the deepest pockets in the chain.
This is the same vendor liability dynamic we see in TCPA cases like Klassen v. SolidQuote, where a company four entities removed from the actual caller was still held vicariously liable. The lesson from that case applies here: distance from the deceptive conduct doesn’t protect you when someone in your chain is causing harm on your behalf.
Insurance Agents: Why This Bill Matters for Your Marketing
Insurance agents and agencies running paid social media campaigns face specific exposure under the SCAM Act—particularly those using Facebook, Instagram, and other platforms to generate leads for life, health, P&C, and Medicare products.
The FTC Is Already Watching Insurance Lead Gen
The FTC has made insurance-related lead generation one of its top enforcement priorities. In December 2024, the agency sent warning letters to healthcare plan marketers and lead generators about deceptive advertising. In August 2025, it announced the MediaAlpha and Assurance IQ settlements—both involving insurance lead generation through social media advertising.
The SCAM Act would add a statutory framework on top of the FTC’s existing authority, creating additional enforcement mechanisms and a private right of action that doesn’t currently exist for most deceptive advertising claims against platforms.
What “Deceptive” Means for Insurance Ads
The bill defines deceptive ads as those involving “material misrepresentations, omissions, or practices likely to cause financial harm.” For insurance advertising, this could include ads that misrepresent coverage benefits, imply government affiliation (a common tactic in ACA marketing), fail to disclose material limitations, or use bait-and-switch tactics like the “free will kit” approach that led to American Income Life’s $14 million settlement.
If your social media ads promise “free quotes” but the consumer experience involves aggressive upselling, or if your ads imply comprehensive coverage that the actual product doesn’t deliver, those ads may be considered deceptive under the SCAM Act’s framework—regardless of whether you’re the one making the call or the one running the ad.
The Offshore Lead Vendor Problem
One of the most significant developments in insurance lead generation has been the rise of fraudulent offshore lead vendors operating through social media. These vendors run deceptive ads on Facebook, Instagram, and WhatsApp, promising leads that were obtained without proper consumer consent—or that don’t represent real consumers at all.
The SCAM Act’s advertiser verification requirements would make it significantly harder for fraudulent vendors to operate anonymously on these platforms. For legitimate insurance agents, this is actually a competitive advantage: when platforms are required to verify advertisers, the unverified and fraudulent operators get squeezed out.
The TCPA Parallel: Why the Enforcement Model Matters
The most important feature of the SCAM Act for our audience isn’t the advertiser verification requirements—it’s the enforcement structure. The bill’s private right of action with treble damages and mandatory attorney’s fees creates the same litigation incentives that have driven TCPA enforcement for decades.
What TCPA History Teaches Us
The TCPA’s $500-to-$1,500-per-violation damages structure, combined with the private right of action, created an entire cottage industry of plaintiff’s attorneys who specialize in TCPA litigation. This litigation model has produced multi-million-dollar class action settlements across the insurance and lead generation industries. When you create a private right of action with treble damages and attorney’s fees in a statute that covers digital advertising, you’re creating the conditions for a new wave of class action litigation. Plaintiff’s attorneys who currently specialize in TCPA cases will have every incentive to expand into SCAM Act enforcement.
What You Should Do Now
The SCAM Act is a bill, not a law. It has been referred to committee, and its path to passage is uncertain. However, the compliance steps it implies are good practice regardless of whether this specific legislation becomes law. The FTC already has authority to pursue deceptive advertising, and the trend toward stricter advertiser accountability is clear.
1. Audit Your Social Media Advertising for Accuracy
Review every social media ad currently running across your accounts. Evaluate whether any ads make claims that could be considered “material misrepresentations” or contain omissions “likely to cause financial harm.” Pay particular attention to ads that imply government affiliation or approval, promise specific benefits without disclosing limitations, use pricing language that doesn’t reflect actual costs, or employ testimonials or endorsements that aren’t substantiated.
If you’re running insurance ads, the FTC’s December 2024 warning letters to healthcare plan marketers provide a useful checklist of the types of claims that attract enforcement attention.
2. Consolidate and Document Your Ad Account Structure
If the SCAM Act or similar legislation passes, you’ll need to demonstrate a clear, verifiable connection between your business entity and every ad account associated with your brand. Start documenting this now. Maintain current business formation documents, ensure each ad account is clearly tied to a verified business entity, document the relationship between your company and any agencies, affiliates, or sub-affiliates running ads on your behalf, and keep records of who has access to each ad account and what their role is.
3. Review Your Affiliate and Vendor Advertising Practices
If third parties run ads on your behalf or under your brand, their advertising practices create risk for you. This is the advertising equivalent of the TCPA vendor audit we recommend for lead buying. Review what claims your affiliates are making in their ads. Ensure their advertising complies with FTC guidelines and platform policies. Include advertising compliance requirements in your vendor contracts. Reserve the right to audit affiliate ad content and creative.
Just as QuoteWizard’s inability to trace consent back through the vendor chain contributed to a $19 million TCPA settlement, inability to verify what your advertising partners are saying on your behalf could create significant exposure under a SCAM Act enforcement framework.
4. Implement TCPA-Grade Documentation for Your Ad Operations
Treat your advertising documentation with the same rigor you apply (or should apply) to TCPA consent records. Maintain records of all ad creative, targeting parameters, and landing pages. Archive versions of ads with timestamps showing when they ran. Document your internal review process for ad compliance. Keep records of any complaints received about your advertising and how they were resolved.
5. Watch the Legislative Landscape
The SCAM Act is not the only legislation targeting digital advertising practices. New York has introduced a parallel state-level bill (S8605) with similar advertiser verification requirements and its own private right of action. California, which has led the way on privacy regulation, could follow with its own version.
The lesson from TCPA compliance should guide your approach here: when you see a regulatory trend forming at both the federal and state level, assume it’s going to arrive—and build your compliance infrastructure before it does.
The Bigger Picture: Compliance as Competitive Advantage
The SCAM Act represents something broader than a single bill targeting social media platforms. It’s part of a regulatory trajectory that is systematically closing gaps in how digital marketing and advertising are governed.
Consider the landscape in early 2026: the TCPA governs how you contact consumers by phone and text. California’s data broker registration (DROP) governs how you collect and sell consumer data. The FTC’s enforcement actions set the standard for truthful advertising in lead generation. State mini-TCPA laws add additional calling and texting requirements. The Colorado AI Act will govern how you use AI in consequential decisions. And now, the SCAM Act proposes to regulate how you advertise on social media platforms.
Each of these regulatory frameworks addresses a different touchpoint in the lead generation lifecycle. Together, they’re creating a comprehensive compliance environment where every step of the process—from advertising to data collection to consent to outreach—is subject to specific legal requirements.
The companies that thrive in this environment won’t be the ones looking for loopholes. They’ll be the ones that built compliance into their operations from the ground up. When your ads are truthful, your consent is documented, your vendors are vetted, and your calling practices are clean, regulatory changes become manageable adjustments—not existential threats.
The compliance-first operators will thrive. Everyone else gets sued.
Frequently Asked Questions
What is the SCAM Act?
The SCAM Act (Safeguarding Consumers from Advertising Misconduct Act) is a bipartisan bill introduced in the U.S. Senate on February 4, 2026, by Senators Gallego and Moreno. It would require social media platforms to verify advertiser identities and take reasonable steps to prevent fraudulent or deceptive paid advertisements. The bill includes FTC enforcement, state attorney general enforcement, and a private right of action for harmed individuals.
Does the SCAM Act apply to lead generation companies?
The bill’s primary obligations fall on platforms that accept payment for advertising, not on the advertisers themselves. However, lead generation companies that advertise on social media will be directly affected by the verification requirements and the bill’s definition of “deceptive” advertising. Additionally, the private right of action allows individuals harmed by deceptive ads to sue, which could include claims against the advertiser.
How does the SCAM Act compare to the TCPA?
Both statutes share key enforcement features: private rights of action, treble damages for willful violations, mandatory attorney’s fees for prevailing plaintiffs, and state attorney general enforcement authority. The TCPA governs how you contact consumers; the SCAM Act would govern how you advertise to them on social media platforms. Together, they would create compliance obligations at both ends of the lead generation process.
Is the SCAM Act law yet?
No. As of February 2026, the SCAM Act has been introduced in the Senate and referred to committee. It has bipartisan support and endorsements from the ABA and AARP, but its path to passage is not certain. However, the FTC already has existing authority to pursue deceptive advertising, and similar state-level legislation is being introduced. Companies should prepare for stricter advertiser accountability regardless of this specific bill’s outcome.
What should my company do now to prepare?
Audit your current social media advertising for accuracy. Document your ad account structure and tie every account to a verified business entity. Review affiliate and vendor advertising practices. Implement TCPA-grade documentation for ad operations. Monitor the legislative landscape at both the federal and state level.
Does the SCAM Act affect AI voice companies?
The SCAM Act’s advertiser verification requirements would apply to any company running paid social media ads, including AI voice platforms advertising their services. More broadly, the bill’s approach to platform liability mirrors the theories being tested in TCPA cases like Lowrey v. Twilio/OpenAI, suggesting a broader trend toward holding technology providers accountable for how their platforms are used.
Need Help Navigating Advertising Compliance?
The intersection of TCPA compliance, FTC advertising rules, state privacy laws, and emerging legislation like the SCAM Act creates novel compliance challenges that require specialized expertise. If your company runs social media advertising for lead generation or insurance products, now is the time to review your practices before the regulatory environment tightens further.
