The FCA seeks to resolve ’the root cause’ of fraudulent adverts. But the government’s Online Safety Bill needs to be broadened if it is to play an important role here

With spoof advertisements still rife and posing a major problem for brokers and insurers, Google will be cracking down on fake ads displayed on its search engine following pressure from the FCA.

Announced in June, the tech giant’s revised Google Ads financial products and services policy is due to come into effect from 6 September 2021 - this will require all UK financial services firms to verify their identity with the regulator before promoting products and services on Google.

The issue this policy seeks to rectify is that fraudulent parties are buying popular phrases that are searched for on Google via a smart phone - for example, an individual may search for ‘Aviva claims number’ after being involved in a road traffic accident. Spoof adverts are then appearing prominently at the top of the search engine’s results.

If the policyholder clicks on a spoof advert’s link and uses the ’click to call’ function on their mobile, they are then unknowingly put through to a fraudulent claims management company (CMC), rather than the genuine insurer.

This enables fraudsters to capture claims information, so they can then trick policyholders for financial gain.

This issue came to light during Insurance Times’ June Fraud Charter roundtable event. Carpenters Group head of public affairs Andrew Thornley said the law firm had called on the government to better regulate the activity of technology firms like Google, in a bid to help combat spoof ad fraud.

In June during a Treasury Committee hearing on economic crime, it was reported that the FCA was allegedly refusing to say whether it would accept an offer by Google to pay back more tha £600, 000 spent on online ads warning people about the dangers of money scams. 

During the hearing, Mark Steward, director of enforcement and market insight at the Financial Conduct Authority (FCA) said the FCA preferred not to run ads warning people before agreeing that “the irony of us having to pay social media to publish warnings about advertising that they’re receiving money from is not lost on us.”

Thornley told Insurance Times: “The fact that the FCA are considering whether to accept these advertising credits is telling. It shows [the regulator is] more interested in resolving the root cause of the issue rather than treating the symptoms by buying more ad words.

“There is now growing momentum behind greater regulation for online advertising – from regulators and parliamentarians alike. We’re confident our work and collaboration with government and industry partners such as the ABI and Insurance Fraud Bureau (IFB) will deliver a solution that protects consumers from the harm the issue brings.”

But what has been done so far to tackle spoof adverts?

A Freedom of Information Act (FOI) request raised in July 2021 by Insurance Times revealed that this year up until April, the regulator spent £241,546.91 on Google ad words. 

Last year, it spent £623,029.58 on Google ad words, compared to £1,247,380.01 in 2019 and £1,690,828.51 in 2018.

“The regulator has spent a huge amount of money on this so far and in evidence to the Treasury Committee, [the FCA’s] director of enforcement Mark Steward said the irony of paying tech firms advertising revenues to mitigate the problem has not been lost on them,” Thornley added.

Steward reportedly told the Treasury: “The irony of us having to pay social media to publish warnings about advertising that they’re receiving money from is not lost on [the FCA].”

Following a number of investigations, consumer champion organisation Which? said in July that scammers are paying to be at the top of Google searches, often posing as genuine financial service firms.

For example, a judgment involving Aviva and Keoghs in February ruled that the affected claimant had been ”knowingly and deliberately misled” after unwittingly dealing with a CMC when trying to arrange a courtesy car following an accident on a snowy day on 1 March 2018.  

Earlier this year, Which? joined a coalition of 13 organisations - including the ABI - that called on the government to include paid online adverts in the scope of the Online Safety Bill (OSB).

Published on 12 May 2021, the draft OSB establishes a new regulatory framework for identifying and removing harmful content from the internet, aiming to stop racial hate, keep children safe and protect democracy.

The OSB originally included measures to tackle online scams, but failed to include fraud via advertising, emails or cloned websites.

June 2021 saw the government move to extend the draft OSB to cover financial scams, with both software firm Guidewire and the Forum of Insurance Lawyers (Foil) being “hugely supportive” of this amendment.

Paul Mang, chief innovation officer at Guidewire Software, said: “There is more that could be done to offer cyber insurance policies that protect ordinary consumers from cyber fraud.”

He noted that the scale of online scams had exploded during the Covid-19 pandemic as cyber criminals sought to exploit people’s anxieties.

Mang added: “A great deal of value can be created by the insurance industry if it works with insured customers to identify all the devices that they own, how secure their passwords are and whether they are being shared on the dark web, particularly as the delineation between personal and work devices continues to blur.

“These are the new considerations that insurers are having to deal with and we are helping insurers understand cyber risks more accurately to write effective policies.”

When asked how insurers and brokers combat being impersonated online, Mang said: ”It can be a bit like a whack a mole as you chase down impersonators who are adept at hiding their tracks.”

This is why he believes that there must be industry collective action, which is exemplified by the work of the Insurance Fraud Bureau in the UK. 

He continued: ”The swarming of these scams highlights also how insurers need to re-evaluate the risks to themselves and their customers.”

For tech companies, Mang said: ”While the OSB omits impersonation, we support our customers in their pressure to get the government to legislate to stop this abuse of online social media advertising. It also is encouraging to see technology companies like Google step forward to help.”

Decisive role

The FCA’s new chief executive Nikhil Rathi has also pressed the government to amend online harms rules to include advertisements.

Speaking about this in a podcast on the FCA’s website dated 4 August 2021, Rathi reiterated the regulator’s stance that it was keen for ads to be included in the OSB, which is currently going through parliament.

On the podcast, Rathi said: “We’re very keen for investment fraud, economic harm, to be included in that bill - in particular as it relates to online advertising. We’ve been very clear publicly about that.

“Both the Treasury Select Committee and the Work and Pensions Select Committee have supported this proposal.

”It will now be a matter for parliament and government to decide whether to pass the amendment that would enable this to happen.

”We think it would play a decisive role in helping us to protect consumers from online harm and particularly those scams that target vulnerable consumers and cause them to lose significant parts of their life savings.”

He deemed the OSB “important” to protect consumers from the wide range of online harms they may encounter.

What are Google’s new measures regarding ads?

According to Which?, new requirements from Google mean that all financial services advertisers targeting the UK must demonstrate they are authorised by the FCA or that they qualify for one of the limited exemptions, for example if the business is an approved third party, a non-financial services advertiser, or a government entity.

Google will be publishing its policy update on 30 August 2021 and enforcement will take effect seven days later.

Advertisers that have not completed the updated verification process in time will no longer be allowed to show financial services ads of any kind in the UK.

Ronan Harris, vice-president and managing director of Google UK and Ireland, said: “We are committed to leading on necessary changes to help fight online scammers.

”Google has also joined Stop Scams UK – the first major technology firm to do so – and [has] pledged $5m in advertising credits to support public awareness campaigns in the UK.”

Stop Scams UK is a not-for-profit organisation that explores cross-sector opportunities to cut the impact of scams on consumers.

What changes are included in the draft OSB?

  • New additions to strengthen people’s rights to express themselves freely online, while protecting journalism and democratic political debate in the UK.
  • Further provisions to tackle prolific online scams, such as romance fraud, where people are manipulated into sending money to fake identities on dating apps.
  • Social media sites, websites, apps and other services hosting user-generated content or allowing people to talk to others online must remove and limit the spread of illegal and harmful content.
  • Under a new duty of care provision, Ofcom will be given the power to fine companies up to £18m or 10% of their annual global turnover, whichever is higher, as well as blocking access to sites.
  • A new criminal offence for senior managers has been included as a deferred power - this could be introduced at a later date if tech firms don’t step up their efforts.