Google must take responsibility for scams

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Google must take responsibility for scams
Clone fraud has risen in 2020. Source: FCA

Steve Timms, chairman of the Work and Pensions Committee, has joined calls from the City regulator for internet companies to take responsibility for financial scams promoted on their platforms.

Speaking to FTAdviser, Mr Timms, who is also MP for East Ham, said internet companies such as Google should share responsibility for hosting fraudulent and misleading adverts.

He said: "We do need an obligation on the internet companies - on Google, on Facebook - that they need to take responsibility for what they are putting online at the moment. 

"They are getting a lot of money from scammers who are placing adverts on their portals, and a lot of people are falling prey to those. We have to have the internet companies accepting their share of the responsibility for what is going wrong at the moment, and helping to resolve it.

"They should not be hosting material that is criminal, and at the moment, they are."

A spokesperson for the FCA told FTAdviser: “Online platforms, such as search engines and social media platforms, are playing an increasingly significant role in putting consumers at risk of harm, by exposing them to adverts for financial products, ranging from scams and promotions of high-risk investments to false or misleading adverts (which can fall within or outside our jurisdiction)."

Mr Timms also said there was a "fundamental requirement for a change in the law" to combat fraudulent material appearing online, especially with the Financial Conduct Authority revealing last month (January) that clone firm fraud has risen exponentially in 2020 (see image, top).

Currently, the department for Media, Culture and Sport is bringing its Online Harms bill to parliament, which aims to crack down on the potential for terrorist material to be spread online, among other things. 

However, the bill does not make provisions for protecting consumers against financial harm being carried out online. This is despite the FCA stating in 2020 that this would be an opportunity to clamp down on scams.

The FCA spokesperson added: "We have been in dialogue with Google for some time and while there has been some progress there is much more that they can do to tackle consumer harm.

"Given the scale of harm that investment fraud causes to consumers, many of whom are vulnerable and need the money they have lost for their retirement, the FCA believes that there is a strong case to include financial harms in the Online Safety bill.”

On the broader point about financial fraud and so on, I am just not convinced this is the appropriate legislative vehicle. -- Oliver Dowden

Mr Timms told FTAdviser: "There is much the government needs to do. Much of this problem is online. Now we are about to see in the House of Commons the government's Online Harms bill.

"Now when the secretary of state for Culture, Media and Sport made a statement about this before Christmas, I pressed him that financial harms need to be within the scope of that bill, and he made it pretty clear within his answer it won't be."

According to Hansard notes from December 15, Mr Timms told parliament: "The Work and Pensions committee is inquiring into pension scams. Much of that problem is online, boosting the profits of tech firms and causing immense hardship.

"Martin Lewis, Which?, my hon. friend the member for Cardiff Central (Jo Stevens) on the front bench and others have called for such scams to be in scope here.

"The right hon. gentleman says they will be if they are 'user-generated', so can he explain how these measures will address the very serious problem of financial online harms?"

But Mr Dowden replied: "Through secondary legislation, we will set out priority harms. I will not go into every last harm, because that will be a process for scrutiny.

"On the broader point about financial fraud and so on, the right hon. gentleman raises very important points, and of course we will seek to address that as a government; I am just not convinced that this is the appropriate legislative vehicle for doing so."

Protecting consumers and credible businesses operating in the financial sector is a priority for us. -- Google

Over the past couple of years, the Financial Conduct Authority has been cracking down on fraudulent and misleading financial adverts online, and in September 2020 spoke scathingly about Google not doing enough to combat the situation.

As part of its report into the LCF debacle, the FCA stated it was working with online platforms to make sure they "rapidly deliver" on a public commitment to preventing harm from online advertising.

Last year, the regulator said: "We have seen some improvement in checks on advertisers, although considerable work remains to be done. We agree with the LCF review’s recommendation that serious consideration be given to the coverage of financial harm in the proposed Online Harms bill."

Adding his voice to the FCA's, Mr Timms said not including financial harm within this bill would be a "missed opportunity", adding: "I am planning to table an amendment to that bill, to try and bring financial harms into scope. 

Google has been working to improve transparency and verification of all advertisers on its platforms. Last year, separate to its business operations verification, the internet giant said it was adding more layers to our advertiser verification to determine bad actors in the ecosystem from the start.

It is understood advertisers will need to submit personal legal identification, business incorporation documents or other information that proves who they are and the country they operate in.

The scale has also been flagged by Google in the past; in 2018 the internet giant terminated 500,000 accounts for violating its policies and, in 2020, Google shut down more than 1m accounts. 

A spokesman for Google claimed the company was working tirelessly to ensure protection for users. The spokesman said: "Protecting consumers and credible businesses operating in the financial sector is a priority for us, which merits careful rules and enforcement.

"We have several policies and protections in place for the promotion of financial services, and if we discover sites that are breaking our policies, we take immediate action."

Simoney Kyriakou is senior editor of FTAdviser

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