The UK government has published a consultation which would reform online advertisement regulations under the Online Safety Bill.
The proposals impose a legal duty on the “largest and most popular social media platforms and search engines” to prevent paid-for fraudulent averts from appearing on their services.
This marks a major move by the UK government in tackling scams after years of campaigning by financial services companies.
The update to the bill also sets out harsher penalties for social media influencers failing to declare product promotions in their posts.
Culture secretary Nadine Dorries said: “We want to protect people from online scams and have heard the calls to strengthen our new internet safety laws. These changes to the upcoming Online Safety Bill will help stop fraudsters conning people out of their hard-earned cash using fake online adverts.
“As technology revolutionises, more and more of our lives the law must keep up. We are also announcing a review of the wider rules around online advertising to make sure industry practices are accountable, transparent and ethical – so people can trust what they see advertised and know fact from fiction.”
Security minister Damian Hinds added: “The changes that we are announcing mean that online and social media companies will have to acknowledge these issues and take robust action to combat the scourge of online fraud, and take more responsibility to protect their users from this high-harm crime.
“Innocent victims must not be taken advantage of and conned online by fraudsters.”
Close all loopholes
Martin Lewis, founder of MoneySavingExpert.com and the Money and Mental Health Policy Institute, said the move comes at a time when consumers are facing an “epidemic” of scam adverts.
“I am thankful the government has listened to me and the huge numbers of other campaigners – across banks, insurers, consumer groups, charities, police and regulators – who’ve been desperate to ensure scam adverts are covered by the Online Safety Bill,” Lewis said. “Scams don’t just destroy people’s finances – they hit their self-esteem, mental health and even leave some considering taking their own lives.
“The government now accepting the principle that scam adverts need to be included, and that firms who are paid to publish adverts need to be responsible for them, is a crucial first step. Until now, only user-generated scams were covered – which risked pushing more scam ads, incentivising criminals to shift strategy. Yet it is a complex area.
“Now we and others need to analyse all elements of this new part of the bill, and work with government and parliament to close down the hiding places or gaps scammers can exploit.”
Mark Steward, executive director of enforcement and market oversight at Financial Conduct Authority, added: “We welcome that the Online Safety Bill will now require the largest platforms to tackle fraudulent advertising. We have been clear about the need for legislation and appreciate the government’s positive engagement on this. We look forward to working closely with the government and regulatory partners as they finalise and implement the details of the draft bill.”
Debbie Barton, financial crime prevention expert at Quilter, said “It is far too easy for scammers to steal the identity of a well-known celebrity, or impersonate the brand of a well-known financial services firm, host a website with a domain located outside the UK, and use a cheap advert to reach potentially thousands of unsuspecting individuals.
“The government wanted to just include user-generated scams, and not paid-for adverts, but this wouldn’t have been enough. In fact, it would have encouraged scammers to just pay for an advert to avoid the new legislation. Now, the legislation will cover scams from all sources. In doing so, the bill will ensure that technology companies face a new legal duty to tackle harm caused as a result of fraudulent content on their platforms.”
Yvonne Collins, head of financial crime prevention at Phoenix Group, added: “The onus is now on social media platforms and search engines to be more vigilant against fraudulent activity on their services, including unlicensed financial promotions and fake ads.
“As platforms and search engines step up and put proportionate systems and processes in place, consumers must continue to be wary of suspicious online activity. Fraudsters look to target those who are vulnerable, and with the cost of living escalating and global uncertainty, they will see this as an opportunity to strike.
“Popular scam techniques to watch out for during uncertain periods include using market volatility around stock markets to encourage you to transfer or review your finances, promoting investment opportunities with guaranteed returns, offering to unlock cash held in pensions, and fake online resources that deliver malware that can infiltrate sensitive data.
“Always take a moment to stop and think before parting with your money or personal information and don’t be afraid of rejecting, refusing or ignoring any requests you receive – only fraudsters will try to rush or panic you, whereas a legitimate company will answer further questions or provide additional information to answer any concerns.”