Govt rejects calls to tackle online scam adverts in bill

Govt rejects calls to tackle online scam adverts in bill

The government has rejected calls from MPs to force internet giants to stop investment fraud facilitated through online advertisements as part of its Online Safety bill.

In its response to the Work and Pensions committee report on pension scams, published today (July 6), the government rejected the MPs' proposals that the forthcoming Online Safety bill should tackle fraud facilitated through advertisements, for example pension products or investment opportunities on search engines.

Instead, the government said there would be a consultation on online advertising regulation later in the year.

The government explained that the Department for Digital, Culture, Media and Sport (DCMS) was considering how online advertising is regulated through its online advertising programme. 

It said this work would ensure that standards about the placement and content of advertising were effectively applied and enforced online to reduce consumers’ exposure to harmful or misleading advertising. 

It stated: “This work will look at the role advertising can play in enabling online fraud and help inform our future efforts to tackle it. DCMS will be consulting on this issue later this year.”

But the Work and Pensions committee pointed out this was in contrast to the Financial Conduct Authority's concerns in this area.

In its own response, the FCA warned online advertising was “the major source of the problems leading to very significant consumer harms”.

It stated: “The outcome we want to see is that platforms have an obligation to identify and remove fraudulent content – regardless of its format. 

“We do not agree with the arguments made by some platforms that such a measure would undermine competitiveness of the UK technology sector as we do not consider a business model which acts as a gateway to large scale fraud against consumers constitutes a sustainable business model.”

But it recognised this was a matter for government and parliament to decide on.

Stephen Timms, chair of the Work and Pensions committee, said: “Ministers claim to understand the devastating impact of illegal activity online, but by constantly failing to act against paid for adverts online they remain at odds with their own enforcement agency and totally ambivalent to what the FCA warns is a major source of harm.

“The FCA sees the damage being done to consumers by online scams day in day out. It doesn’t think it has enough powers to protect people, yet still the government cannot be cajoled into action.

"A vague promise to consult later this year is too little too late. Without backing words with action, the law will remain toothless and continue to allow scammers to advertise with impunity while tech giants line their pockets from the proceeds of crime.”

Government action

In the Queen’s Speech delivered in May, a new version of the Online Safety bill was introduced to include financial fraud and user-generated online scams but not fraud via advertising, emails or cloned websites.