Social media giants should be forced to take down paid-for scam advertisements through new online regulations, according to a joint committee of Lords and MPs.
The Joint Committee on the Draft Online Safety Bill, a collection of peers and MPs that are scrutinising the government’s proposed online reforms, said Boris Johnson’s government “should introduce legislation to ensure that search engines and social media platforms do not promote financial scams through advertising”.
The Online Safety Bill aims to force online firms, particularly social media companies and search engines, into a legal duty of care to its users.
This would mean that it has a legal responsibility to take down any content that “gives rise to a reasonably foreseeable risk of a significant adverse physical or psychological impact on individuals”.
The bill includes provisions for financial fraud by individual accounts, but not for scams carried out through paid advertising.
Around £2.3bn was lost by UK consumers last year through online scams, with a large chunk of this coming through social media, according to Which?
The Financial Conduct Authority (FCA) told the Joint Committee on the draft Online Safety Bill that “the problem [of online fraud] is most manifest in the paid-for space, so it does not make sense for the bill not to deal with the very heart of the problem, which is the paid-for advertising space”.
MPs and peers on the committee said the exclusion of of paid-for advertising in the Online Safety Bill “would obstruct the government’s stated aim of tackling online fraud and activity that creates a risk of harm more generally”.
“Excluding paid-for advertising will leave service providers with little incentive to remove harmful adverts, and risks encouraging further proliferation of such content,” they said.
“Ofcom should be responsible for acting against service providers who consistently allow paid-for advertisements that create a risk of harm to be placed on their platform.”
It comes as UK regulators recently raised the alarm over fraudulent cryptocurrency advertisements.
In November, the Advertising Standards Agency labelled crypto ads a “red alert priority” following concerns the public are being encouraged to invest in dubious projects without being made aware of the risks.
Earlier this year Kim Kardashian was name-checked by the UK’s financial watchdog, which warned investors against taking financial advice from social media influencers after she promoted potential scam ‘Ethereum Max’ to her 269m Instagram followers.
Treasury minister John Glen last month said there needed to be a “level playing field” on regulation between cryptocurrency traders and the wider financial services industry in the wake of crypto’s increasing popularity.
Blair Halliday, the UK lead for crypto exchange Gemini, said: “As crypto inextricably marches further into the mainstream … there is a role for all players in the ecosystem from big tech to crypto exchanges to protect consumers from online scams … along with the risks from firms who have not sought FCA Crypto-asset approval.”
Digital Secretary Nadine Dorries commented: “Our groundbreaking Bill will require tech firms and social media companies to take long overdue responsibility to protect their users – especially children – from a full range of illegal and harmful content. Crucially the new comprehensive legislation will hold big tech to account if they fail to act.
“I’d like to thank the Committee for its work. The government will consider its recommendations carefully and incorporate them where we feel the Bill can be strengthened further to make Britain the safest place to go online, while protecting free speech.”