FTC Seeks Public Comment on Whether To Update Rule on Impersonation of Government and Businesses To Address Platforms’ Role in Promoting Impersonation Scams

On September 24, 2026, the Federal Trade Commission (FTC) announced an Advance Notice of Proposed Rulemaking (ANPRM) considering whether to update its Rule on Impersonation of Government and Businesses (16 C.F.R. Part 461) to address online platforms’ ad optimization practices that may further impersonation scams. Any resulting rulemaking would proceed under the more substantial Magnuson-Moss procedures and would invite feedback on the Section 230 liability shield. The ANPRM seeks comment on whether to amend the existing rule, propose a new rule, or pursue non-regulatory measures.

The ANPRM focuses on ad optimization tools offered by social media platforms, search engines, and other digital marketplaces, including: ad copy, image, and video generation; product listing creation; enhancements; and audience targeting using consumer data. It asks what knowledge or participation should trigger liability and addresses costs, small business impacts, AI innovation, and overlap with other laws.

The FTC is also seeking comment on platform incentives and current safeguards, which will be due 60 days after publication in the Federal Register.

Consumer-facing platforms, including search engines, social media, and online marketplaces, should consider the implications of potential updates to the existing rule, in addition to advertisement technology and artificial intelligence tool providers. Financial institutions in particular should take note of this development, because banks are frequently impersonated, including in search engine advertisements cited in the ANPRM. Interested parties have an opportunity to comment on the ANPRM and also should review their brand protection, ad  review, and anti-fraud programs in light of the FTC’s focus on this area.

Background: The Impersonation Rule and the Scale of the Problem

The FTC finalized its Rule on Impersonation of Government and Businesses in March 2024, prohibiting impersonation of government entities and businesses. In December 2024, the FTC decided not to proceed with a proposed “means and instrumentalities” provision that commenters criticized as overbroad. That provision would have made it a violation of the Rule to provide goods or services with knowledge or reason to know that they would be used to impersonate a government entity, business, or individual or to misrepresent an affiliation with one, which could have extended liability to parties other than the imposters themselves.

In 2025, the FTC received more than one million imposter scam reports with nearly $3.5 billion in reported losses. The ANPRM reflects the FTC’s concern that platforms “internalize the revenue but externalize the risk” of optimizing fraudulent ads. In an example related to Medicare, the ANPRM states that scammers have used one online platform’s ad optimization and targeting tools to deliver impersonation to seniors, promising “free” benefits such as groceries or money. The same report found that scam advertisers averaged 151 ad removals each, suggesting that removals did not stop repeat offenders. The ANPRM also describes “search-engine malvertising,” in which scammers buy high-ranking sponsored placements using a business’s trademarks or brand names that place deceptive third-party hotel and booking portals above genuine hotel websites and steer consumers to lookalike reservation portals.

The Magnuson-Moss Rulemaking Process

A trade regulation rule defining an unfair or deceptive act or practice under Section 18 of the FTC Act (15 U.S.C. § 57a), as amended by the Magnuson-Moss Warranty–Federal Trade Commission Improvement Act of 1975 and the FTC Improvements Act of 1980, follows procedures more demanding than ordinary notice-and-comment rulemaking under the Administrative Procedure Act (APA), including a mandatory ANPRM and more detailed economic analysis. Before such a rule can be finalized, the Commission generally must proceed through the following steps:

a) Unlike the APA, which does not require advance notice, Section 18(b)(2) of the FTC Act requires the Commission to publish an ANPRM before proposing a rule. The ANPRM is published in the Federal Register and submitted to the Senate Committee on Commerce, Science, and Transportation and the House Committee on Energy and Commerce, with an opportunity for public comment. It must contain a brief description of the area of inquiry under consideration, the objectives the Commission seeks to achieve, and possible regulatory alternatives under consideration. This is the current stage.

b) The Commission may then issue a Notice of Proposed Rulemaking (NPRM) no sooner than 30 days after submitting it to those committees. The NPRM must state the proposed rule text with particularity, explain the reasons for the proposal, and include a preliminary regulatory analysis.

c)The NPRM is followed by a written comment period.

d) The Commission must also provide an informal hearing at which interested persons may make oral presentations. Limited cross-examination and rebuttal on disputed issues of material fact may be permitted as the presiding officer deems appropriate.

e) The Commission may issue a rule only if it has reason to believe that the practices at issue are prevalent, such as based on prior cease-and-desist orders or other information indicating a widespread pattern.

f) Any final rule must include a statement of basis and purpose addressing prevalence, the unfair or deceptive nature of the practice, and its economic effects, together with a final regulatory analysis. A final rule is subject to judicial review in a federal court of appeals, which may set it aside if it is not supported by substantial evidence in the rulemaking record.

This process typically takes considerably longer than ordinary APA rulemaking, so no new obligations are imminent. The ANPRM stage nevertheless is the earliest—and often the most influential—opportunity to shape the rulemaking record.

Where the FTC is Heading

 The ANPRM signals a potential shift toward holding platforms accountable at the ad optimization level. The conduct under consideration includes tools offered by social media platforms, search engines, and digital marketplaces that generate ad copy, images, and video; create or enhance product listings; and target audiences using consumer data. The FTC is considering whether to amend the existing rule, propose a new rule, or pursue non-regulatory measures. Importantly, any provision it may adopt would be narrower than the abandoned “means and instrumentalities” approach, focusing specifically on platforms’ own ad optimization practices rather than on any provider of any good or service.

The FTC’s rationale is that platforms may “internalize the revenue but externalize the risk” of optimizing fraudulent ads. The ANPRM’s reference to repeat offenders—scam advertising averaged 151 ad removals each—supports the concern that removals alone may not stop continued abuse. Potential measures include pre-posting ad review, advertiser verification, detection and consumer reporting tools, investigation and removal of confirmed impersonation ads, discipline of offending advertisers, and possible suspension of ad optimization services.

The ANPRM also asks whether these measures should operate as a safe harbor defense rather than as standalone requirements. In practice, a safe harbor defense could allow a platform to avoid liability by demonstrating that it adopted and followed specified safeguards, while standalone requirements would impose affirmative obligations regardless of the platform’s conduct.

If adopted, the rule would allow the FTC to seek civil penalties and consumer redress in a single federal action under Section 19 of the FTC Act.

Key Questions Raised in the ANPRM

Comments are due 60 days after publication of the ANPRM in the Federal Register. The ANPRM seeks input on the following questions:

• Whether to amend the existing rule, propose a new rule, or pursue non-regulatory measures;
• What level of knowledge or participation by a platform should trigger liability;
• Which ad optimization practices should be covered;
• Whether platforms’ incentives and current safeguards are sufficient to address the problem;
• Whether the listed measures should be standalone requirements or a safe harbor defense;
• What compliance costs and small business impacts could result;
• How the approach could affect AI innovation; and
• How the approach would overlap with other laws.

Implications for the Section 230 Liability Shield

Section 230(c)(1) of the Communications Decency Act (47 U.S.C. § 230) generally prevents a provider from being treated as the publisher or speaker of information provided by another information content provider. That protection historically has shielded platforms from liability for fraudulent content created by third parties.

The immunity does not extend to content that a platform itself creates or develops in whole or in part, and courts have denied immunity where a platform materially contributes to unlawful content.¹

By targeting platforms’ own ad optimization conduct—such as generating ad copy, images, and video, enhancing listings, and targeting audiences with consumer data—rather than the mere hosting of third-party ads, the FTC could argue that platforms are liable for their own actions that facilitate fraud, not merely as publishers of third-party content. This likely would be a contested issue and an important subject for comments; the ANPRM itself does not expressly discuss Section 230.

How Mayer Brown Can Help

Mayer Brown’s Public Policy, Regulatory & Government Affairs and Global Investigations & White Collar Defense practice groups include former government lawyers who advised on technology, communications, consumer protections, and privacy regulatory and public policy matters. Together, these teams help clients assess exposure, prepare and advocate FTC comments (including through the Magnuson-Moss process and engagement with congressional committees), respond to investigations, and review brand protection, ad review, and anti-fraud programs.

 

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¹ See Fair Housing Council v. Roommates.com, 521 F.3d 1157 (9th Cir. 2008) (en banc); FTC v. Accusearch Inc., 570 F.3d 1187 (10th Cir. 2009).