Ofcom will be setting out further details for platforms

The insurance industry has backed changes made yesterday (9 March 2022) by the UK government to the Online Safety Bill to include pre-paid fraudulent advertising within its scope. 

The bill will now cover unlicensed financial promotions, fraudsters impersonating legitimate businesses and fraudulent adverts.

Under the new fraudulent advertising duty, social media platforms will be required to put systems in place to prevent or minimise spoof ads online, as well as remove them.

James Dalton, the ABI’s director of general insurance policy, said: “We wholeheartedly welcome the changes to the Online Safety Bill and are pleased the government has listened to the many different sectors and organisations, including our own, which have called for paid-for fraudulent adverts to be stopped on social media platforms and search engines.

“It’s essential this happens to prevent vulnerable customers being scammed and to ensure the bill meets its central objective of making the UK the ‘safest place in the world to be online’.

”We will analyse this complex bill when it is introduced into parliament to ensure that no gaps are left for scammers to exploit and that Ofcom is given the necessary enforcement powers to punish those that break the law.”

Fraudulent advertising duty

Broadcast regulator Ofcom will be setting out further details on what platforms will need to do to fulfil the new fraudulent advertising duty.

This could include:

  • Making firms scan for scam ad before uploading to systems.
  • Checking the identity of those who wish to publish advertisements.
  • Ensuring financial promotions are only made by firms authorised by the FCA.

Aviva has been among those campaigning for financial harm to be included in the bill’s scope.

Aviva’s director of fraud prevention Rob Lee said: “We have seen firsthand the often devastating impact fraud has on the financial and mental wellbeing of victims.

“The legislation needs to tackle the problem of financial scams and misleading financial promotions. Our concern is centred on the sharp practices employed by fraudsters, which mislead consumers and put them at serious risk of financial harm.”

Lee added that Aviva will need to examine the detail of the bill when it is presented to parliament, to ensure that consumers are adequately protected at every stage of their online journey. However, the introduction of the new duty represents a “significant shift in the right direction”, Lee added. 

James Burge, Allianz Commerical’s head of counter fraud, added: ”I am very happy that the Online Safety Bill tackles fraudulent ads. 

“It had become too easy for claims management companies to impersonate insurers in paid-for online ads. Internet companies will need to put in place systems and processes to prevent and remove fraudulent ads, whether they are controlled by the platform itself or an advertising intermediary.”