FCA calls for new legislation to prevent online scams
The Financial Conduct Authority called for legislative changes on Thursday to protect consumers from online scams.
The regulator said duties on internet companies in the government’s planned Online Safety Bill should extend to paid-for advertising, as well as user-generated content. The government’s proposed Bill currently covers only user-generated content.
The FCA also argued the Bill should designate content relating to fraud offences as ‘priority’ illegal content, requiring monitoring and preventative action by platforms.
Chief executive Nikhil Rathi said: "We see real risks to consumers from outside our remit from both online advertising and from those using exemptions to sell products to ordinary customers. Change is needed and we will continue to push for powers where we need them."
Laura Suter, head of personal finance at AJ Bell, said: "The FCA has firmly pointed the finger at social media sites, such as Facebook, Twitter and Instagram, as needing to do more to stop the rise in fraud.
"Online scammers have come alive during Covid, preying on the fact that we were all spending more time on the internet. The FCA has seen a 77% increase in scams reported to it between April 2020 to March 2021 when compared to the previous 12 months. A total of £4m a day was stolen through fraud in the first half of this year, an increase of almost a third, and clearly that will help make politicians and regulators sit up and do more to solve the problem.
"Google has already announced a plan to help shut down the number of scammers who pay for ads so their results will appear high up in search rankings, in order to ensnare a large number of savers. But now the FCA has set its sights on the social media platforms that serve as a gateway to fraudsters and allow them to spread their fraud quickly and with ease.
"The issue with social media sites is that scammers can very cheaply and easily spread their messages to thousands of people and once the posts are live it’s hard to control them."