The Department for Digital, Culture, Media & Sport has ceded to industry and regulator pressure and is including adverts in its draft online safety bill to address the proliferation of scams, with fines of up to £18m or 10% of turnover for digital providers who fail to comply. It has also launched a wider consultation on advertising. 

 

The government had initially excluded financial harm completely from its online safety bill. After an industry outcry, it added user-generated harm to the bill in May last year, but the financial services industry, along with the Financial Conduct Authority, National Economic Crime Centre and campaigners Martin Lewis and Which? have continued to call for the inclusion of fraudulent adverts, along with many MPs. 

   

 

    

Late on Tuesday, the government said it is now adding a new duty to the bill which will bring fraudulent paid-for adverts on social media and search engines into scope, whether they are controlled by the platform itself or an advertising intermediary. 

 

It said such companies will need to put in place “proportionate systems and processes” to prevent or, in the case of search engines, at least minimise the publication and hosting of fraudulent advertising and remove it from their websites when they are made aware of it. 

 

 

Telecoms regulator Ofcom will set out further details for the companies in scope, which the DCMS said could include making firms scan for scam adverts before they are uploaded to their systems, checking the identity of those asking to publish ads, and ensuring financial promotions are only made by firms authorised by the FCA. Ofcom will check if companies’ measures are adequate and have the power to hold companies to account by blocking their services in the UK or issuing fines of up to £18m or 10% of annual turnover. 

 

“We want to protect people from online scams and have heard the calls to strengthen our new internet safety laws. These changes to the upcoming Online Safety bill will help stop fraudsters conning people out of their hard-earned cash using fake online adverts,” said Culture Secretary Nadine Dorries. 

 

"Today we are also announcing a review of the wider rules around online advertising to make sure industry practices are accountable, transparent and ethical - so people can trust what they see advertised and know fact from fiction,” she added. 

 

Security minister Damian Hinds said fraud is on the rise. “The changes that we are announcing today mean that online and social media companies will have to acknowledge these issues and take robust action to combat the scourge of online fraud, and take more responsibility to protect their users from this high-harm crime,” he said. 

 

 

Financial firms have previously pointed to the role and underregulation of big tech, which often profits twice from a scam – getting paid by criminals for the scam ad, and then again by legitimate organisations to post prevention ads. 

 

Martin Lewis, founder of MoneySavingExpert.com and the Money and Mental Health Policy Institute, whose face is among the most used by scammers in the UK, said the UK is in the middle of a scams epidemic. The inclusion of scam adverts was a crucial first step, he added:  “Yet it is a complex area. Now we and others need to analyse all elements of this new part of the bill, and work with government and parliament to close down the hiding places or gaps scammers can exploit.” 

 

Executive director of enforcement and market oversight at the FCA, Mark Steward, welcomed that the bill will now require the largest platforms to tackle fraudulent advertising.  

 

“We have been clear about the need for legislation and appreciate the government’s positive engagement on this. We look forward to working closely with the government and regulatory partners as they finalise and implement the details of the draft bill,” he said. 

 

The Personal Investment Management & Financial Advice Association has said it is delighted by the news that online adverts are being included in the bill after a year-long campaign, calling it a step in the right direction. 

 

Chief executive Liz Fields said: “Of course, we will wait to see the detail in the bill. But we are delighted to see the government has seen sense and is willing to act to save thousands of people from the threat of fraud, which is after all, the widest reported crime in the UK today.”