The government has been urged to include scam protection in its forthcoming Online Harms Bill as warnings were sounded that a lack of protection made vulnerable consumers “easy prey”.
Research from the Money and Mental Health Policy Institute shows that more than 4.5m people with mental health problems have been victims of online scams, causing “crippling” financial harm.
According to the charity’s findings, the risk had become more acute during the pandemic with nearly 2m adults falling victim to online scams in the six months after lockdown began.
It was of particular concern for vulnerable consumers, the research shows, as people who had experienced mental health problems were three times more likely to have fallen victim to a financial scam — 23 per cent compared to 8 per cent — and accounted for three in five of all online scam victims.
The charity warned while the risks posed by online scammers was growing, consumer protections in the UK had failed to keep up.
Money and Mental Health urged the government to remedy the issue, calling on those in power to include scams in the bill and give the new online harms regulator the powers to clamp down on online scammers.
Possible new powers include forcing online platforms like Facebook, Google and Twitter to take greater action to prevent them appearing on their sites.
Gulf of scam laws
There is currently no legal system in place to force search engines and social media platforms to remove fake websites and fake adverts which ‘clone’ a financial services firm.
The FCA has called for fraud to be included within online harms legislation, arguing that without changes to the law which provide the regulator with the power to force adverts to be removed, strong results could not be achieved.
Earlier this year the regulator lambasted Google and other search engines for their efforts in policing high risk and scam financial adverts online.
Others in the industry have echoed the regulator’s calls, urging the government to create a “legally enforceable” system to prevent search engines and social media platforms from hosting scam adverts on their sites.
Jane Goodland, corporate affairs director at Quilter, said: “The government has opened up a can of worms in their scrutiny of online harms.
“What’s come to the surface has been an epidemic of financial scams, including fake investment scams, fraudulent Covid testing kits, fake HMRC texts and the list goes on. These scams will only get worse without firm government action.”
Sarah Pennells, head of financial capability at Royal London, said scammers were “ruthless”, noting that the number of reported scams were likely underestimated because victims were often embarrassed.
She added: “Anyone can fall for a scam. Banks and tech companies need to do more, but we can help friends and family by talking about money more openly, by asking questions if we think something is amiss and by reporting dodgy phishing emails and scam websites.”