TOPEKA, Kan.–After sharing the story of an elderly customer who was scammed out of tens of thousands of dollars in what she believed would be a scholarship honoring her dead husband, a bank executive in this state expressed support for a law that would hold social media platforms liable for damages caused by fraudulent ads if they knowingly allow such ads on their platform or ignore credible reports of fraud.
The comments came during an informational hearing on House Bill 2648 in the Kansas legislature, which would require social media platforms to verify the identities of advertisers, provide users with clear tools to report suspected fraud and investigate complaints within 72 hours, according to the Kansas Reflector. Platforms could be held liable for damages caused by fraudulent advertisements if they knowingly allow such ads to run or ignore credible reports of fraud.
The measure also would prohibit telecommunications companies from transmitting calls that falsely identify a caller’s name or phone number, the report said.
Anti-Social Media
Banking representatives told a joint committee of House and Senate lawmakers that financial institutions are increasingly confronting scams that originate on social media platforms or through spoofed phone calls, the Reflector reported.
Tony Weingartner, manager of the financial intelligence unit at Topeka-based Capitol Federal Savings Bank, shared the story of the scammed elderly customer, and noted that despite intervention from bank staff, law enforcement and social workers, the woman remained convinced the scholarship was legitimate,
“She couldn’t accept it,” he told lawmakers. “And now, my understanding is, even with a conservator over her finances, she still believes that there’s a scholarship out there for her husband. There isn’t one.”
Weingartner also cited a recent case in which the bank lost $45,000 after a fraudster used caller ID spoofing to impersonate a bank employee. The victim provided account details, and the scammer later convinced the victim’s phone service provider to redirect calls to a new number. When the bank called to verify suspicious checks, the fraudsters answered and falsely approved the transactions.
A ‘Team Sport’
Kelly VanZwoll of the Kansas Bankers Association, who introduced the bill in February, told lawmakers banks are already on the front lines of protecting consumers but cannot address the growing problem alone.
“It really is a team sport,” VanZwoll said. “We can’t do it alone, and that’s what we need your help.”
VanZwoll presented statistics she attributed to reporting by The Wall Street Journal and Reuters indicating that half of scams affecting one large bank were traced to ads on platforms operated by Meta. She said the reports found that 70% of new advertisers on Meta were flagged for fraud and that 96% of valid user scam reports were ignored, the Reflector stated.
A representative for Meta did not immediately respond to a request for comment, according to the Kansas Reflector.
What Opponents Say
Opponents of the proposal argued the bill could create legal and constitutional problems. Megan Stokes, state policy director for the Computer & Communications Industry Association, said in written testimony the legislation would regulate interstate services governed by federal law and could violate the First Amendment by restricting protected speech.
She also objected to a provision allowing individuals to sue companies for violations, warning that courts could be flooded with “frivolous claims with little evidence of actual injury.”
