The government should bring in legislation to help fight the rampant fraud online, the financial conduct authority (FCA) writes in its annual perimeter report.
The City watchdog suggests a legal framework that would force tech giants like Facebook and Google to prevent online scammers that currently advertise on their platforms.The FCA has been grappling with its limited powers over fraudelant paid-for advertisements appearing online.
In a paper, published this week, the FCA calls for classifying fraud as ‘priority’ illegal content, which would force platforms like Facebook and Google to monitor and take preventative action.
Few practical barriers for online scams
The regulator received 30,000 reports of potential scams from April 2020 to March 2021 – which represents 77% surge over the previous 12 months.
“Online platforms, such as search engines and social media platforms, are playing an increasingly significant role in disseminating promotions of financial products and services,” the FCA writes in the paper.
“This includes adverts which expose consumers to significant risk of harm such as promotions for high risk investments which are unsuitable for most investors, adverts which make false or misleading claims and scams which may or may not fall within our jurisdiction.”
The FCA said that the scammers have “unprecedentedly cheap access to an online population of consumers” who find it difficult to differentiate legitimate offers from fraudulent ones.
“We continue to believe the protection of consumers from illegal online scams would be strengthened through clear legal obligations on platform operators within the Government’s Online Safety Bill and that the duties in the bill should extend to paid-for advertising, as well as user-generated content,” the FCA writes.