The Financial Conduct Authority (FCA) has told MPs it plans to take formal action against social media and search engines that do not prevent online scammers. Fraudulent adverts and websites are able to use companies such as Google and social media companies like Facebook for online financial ads.
FCA Head of Enforcement, Mark Steward, told the Treasury select committee on Monday 14th June 2021 that the UK had been previously blocked from acting against online platforms that did not adequately screen financial adverts and make sure they were approved by an FCA regulated firm or individual. Previous rules under the European Union on financial adverts did not extend to online and social media platforms. This meant the FCA was unable to take legal action against the platforms being used to post fraudulent advertisements.
Mark Steward emphasised the level of consumer harm that scammers cause and since the Covid-19 pandemic, there has been a significant surge in the level of internet scams, telling MPs;
“The particular focus for us is online advertising of regulated activities by firms that are not authorised by us. In many instances we believe that some of those ads are scams and frauds.”
He added that the FCA has already issued over 600 warnings about scammers in 2021 so far which is more than double the number for the same period in 2020. Mr Steward went on to say;
“Social media doesn’t have strong robust means of detecting these things at the gateway. It allowed volume ads to be processed and these appear in our searches on a daily basis.”
Online platforms like Google which charge for advertisements on its platform are potentially making millions every year from fraudsters. Steward warned that the FCA will act against social media companies if they continue to accept advertisements for online financial scams, saying that if Google did not do more to tackle fraudsters the regulator will seek to take action in a “more formal way”.