Banking

MEL STRIDE: Government must finally stand up to online crooks

Government must finally stand up to online crooks, says chairman of the Treasury committee MEL STRIDE


Every day innocent consumers are falling victim to fraudulent online advertising.

Scammers are largely acting with impunity online, developing sophisticated websites, systems and even call centres to draw in unsuspecting victims.

And far from slowing down this onslaught of economic crime, the pandemic has tragically provided further opportunities for these despicable criminals.

Online threat: Scammers are largely acting with impunity online, developing sophisticated websites, systems and even call centres to draw in unsuspecting victims

In an era of low interest rates, it’s no surprise that people are trying to find ways to stretch their hard-earned money further.

But a quick search online for something as simple as ‘How to invest’ or ‘Can I move my pension?’ can plunge you into a Wild West of fraudulent adverts, where even the savviest among us would struggle to work out what’s legitimate and what is a scam.

All of this explains why the Treasury Select Committee is calling on the Government to legislate against fraudulent adverts in its Online Safety Bill. 

At the moment, it covers various types of user-generated fraud, but does not protect against fraud committed through an advert. 

We believe that online platforms should have an obligation to prevent fraud conducted through paid-for advertising. Why should these firms benefit when the victims stand to lose so much?

The Financial Conduct Authority (FCA), the Governor of the Bank of England, the Financial Services Compensation Scheme and the City of London Police have all supported this call, and I commend the Daily Mail’s campaigning on this critical issue.

As MPs, we’ve heard heart-breaking stories of individuals whose lives have been ruined. Consumer group Which? told us of someone who lost almost £100,000 after clicking on an advert featuring fake celebrity endorsements claiming to be from Martin Lewis and Deborah Meaden. 

Another lost £160,000 after clicking on an advert they thought was for an Aviva scheme. That’s why the committee, which I chair, is conducting an inquiry into economic crime. 

This follows our report in June on the collapse of investment company London Capital and Finance (LCF).

LCF, which advertised ‘mini-bonds’, was told to withdraw its ‘misleading and unclear’ promotional material by the FCA in December 2018. A month later it entered administration.

By the time of its collapse, LCF had sold almost 17,000 investment products worth more than £230million. The fall-out is ongoing. Without new legislation, consumers online will remain highly vulnerable. 

The absence of sufficient protections means we are now in the preposterous position where City watchdog, the FCA, has spent £600,000 on advertising online to encourage people not to click on fake ads. It has even had to resort to using social media influencers to educate people on the risks of online investments.

To show they’re serious about combatting scams, online platforms should return this money.

This afternoon we’ll be quizzing bosses at Google, Facebook, Amazon and Ebay on what they’re doing to clean up scams.

We’ll ask what action they are taking to tackle fraudsters and how they can work with Government to halt this evil epidemic.

Online platforms provide vital services that so many of us embrace and enjoy, but they must be far safer places for innocent consumers and investors.

This means that the coming legislation needs to see platforms embrace a new duty of care to their users, so that if they are suspicious or unsure, they do not take a company’s advertising money.

Some major platforms are working alongside the FCA to prevent these scammers from displaying fraudulent financial adverts, but I want us to go further.

My sense is that the Government is in listening mode on this. For the many thousands of innocent people caught in these vile scams, let’s hope so.

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