A coalition of organisations championing consumers, and representing civil society and business, have today joined forces to warn that the UK risks failing in its ambition to be the safest place in the world to be online unless it uses new laws to protect people from an avalanche of online scams.
In a joint letter to the Home Secretary and Digital Secretary, 17 organisations have urged the government to include online scams in its proposed Online Safety Bill – which could be announced in next week’s Queen’s Speech – so that consumers are better protected against the devastating financial and emotional harm caused by these crimes.
The organisations that have signed the letter include Which?, the Money and Mental Health Policy Institute, Carnegie UK Trust, UK Finance, the Personal Investment Management and Financial Advice Association (PIMFA), the City of London Corporation, City of London Police, The Investment Association, Association of British Insurers (ABI), MoneySavingExpert and Age UK.
From using social media to stay in touch with friends and family to using search engines to research potential investments at a time of record-low interest rates – the coronavirus crisis has meant people are spending more time online than ever before.
However, scams have escalated in the past 12 months, with Action Fraud figures showing that £1.7 billion was reportedly lost to scams in the last year. Many criminals have shifted their activity online. Action Fraud estimates that in the year to June 2020, 85% of all fraud was cyber-enabled.
The actual financial losses are likely to be much higher and do not capture the devastating emotional impact on victims. Research also shows that vulnerable people, including those experiencing mental health problems, are more at risk of falling victim to these crimes online.
In their letter, the organisations write:
“Online platforms play a pivotal role in enabling criminals to reach and defraud internet users through the hosting, promotion and targeting of fake and fraudulent content on their sites, including adverts that they make significant profits from. Yet platforms have very little legal responsibility for protecting their users, despite often being the best placed to tackle harmful content.
“While we recognise there are initiatives being progressed by the Government designed to tackle aspects of online fraud, there is a growing risk that current plans for future regulatory frameworks are not taking a comprehensive approach to the threats faced by consumers and do not reflect the extent or urgency of the problem.”
UK Finance figures show a 32 per cent increase in investment scam cases in 2020, which are often promoted through adverts on search engines and social media offering higher than average returns. One victim of such a scam was Maria Teresa Jackson, 63, a teacher. Ms Jackson was tricked by an advert she saw on a social media site, featuring a fake news story with fabricated quotes from celebrity adventurer Bear Grylls, who supposedly told how he had become a millionaire by trading in Bitcoin.
She clicked the button and put in her details and soon received a phone call from a “financial advisor” who showed her around a professional looking website, and was very knowledgeable about trading. Over time she was persuaded to transfer increasing amounts of money to the scammer. It later became clear that the Bitcoin did not exist. Scammers stole nearly £120,000 and First Direct, her bank, has so far refunded her half that amount.
She said: “I felt completely sick. I’m overall better now but often I get flashbacks of certain events and that upsets me a lot. I usually get them at night when I’m in bed and when that happens, it sets the tone for a bad night’s sleep.”
A wide-ranging consensus has emerged across industry, regulators and consumer groups on the urgent need for action to tackle scams and the critical role that online platforms must take in doing more to protect their users.
The coalition of groups is calling for online platforms to be given a legal responsibility to protect users from fake and fraudulent content on their sites that lead to scams. The government now has a perfect opportunity to deliver this in its proposed Online Safety Bill, which could be announced as part of next week’s Queen’s Speech on 11 May.
Anabel Hoult, CEO of Which?, said:
“The biggest online platforms have some of the most sophisticated technology in the world, yet they are failing to use it to protect scam victims who are suffering devastating financial and emotional harm due to the flood of fake and fraudulent content posted online by criminals.
“The time for self-regulation is over, as clearly it has not worked. The case for including scams in the Online Safety Bill is overwhelming and the government must take the opportunity to act now. Online platforms must be given a legal responsibility to prevent, identify and remove fake and fraudulent content on their sites so that their users are better protected.”
Martin Lewis, Founder of the Money and Mental Health Policy Institute and MoneySavingExpert.com, said:
“It beggars belief that the government’s Online Safety Bill could ignore the epidemic of scams that the UK faces – but that’s the plan. Scams don’t just steal people’s money, they can take their self-respect too and those with mental health problems are three times more likely to be affected. The policing of scams is critically underfunded, leaving criminals to get away with these frauds with impunity. The government has a chance to at least deny them the ‘oxygen of publicity’ by making big tech responsible for the scammers adverts it is paid to publish.
“I plead on bended knee for the government to take that opportunity, by putting scams in the Online Safety Bill. Failing to do so will betray its promise to create world-leading online protection and will leave vulnerable people defenceless against online crime in the midst of a global pandemic.”
David Postings, Chief Executive at UK Finance, said:
“Fraud has a devastating emotional impact on victims and even when the victim is reimbursed, the stolen cash is used to fund serious organised crimes which damage our society, including terrorism, drug trafficking, and child sexual exploitation.
“The banking and finance industry is tackling fraud on all fronts, but we can’t do it alone. We need other industries including the online platforms exploited by criminals to join the fight and take responsibility for criminal activity that is happening on their doorstep. It’s not right that online giants are effectively profiting twice – once from criminals marketing scams on their platforms and again from organisations having to advertise fraud warnings to consumers. We are strongly calling on the government to take a major step forward by including economic crime in the upcoming Online Safety Bill and helping ensure tech giants take responsibility for their part in protecting consumers from the scourge of online fraud.”
William Perrin, Trustee at Carnegie UK Trust, said:
“Our work at Carnegie UK Trust has set out the case for a systemic, statutory duty of care that would make online platforms take responsibility for the design and processes of their services to reduce online harm. This new research underlines the urgent need for action to protect consumers from harms such as online fraud and scams – and the Online Safety Bill is the way to do it. Both the City of London Police and the National Economic Crime Centre have told Parliament that their current powers are not enough to limit the spread of online fraud and scams. It is vital that the Government reconsider their inclusion in the Online Safety Bill.”
Liz Field, Chief Executive of PIMFA, commented: “The financial services industry has along with our partners been calling for financial harm to be included in the Online Safety Bill for some time. It is now vital that the Government takes action to provide better protection for consumers online by ensuring online search and social media firms take greater responsibility for what we, their customers, see on their platforms.
“The Online Safety Bill could provide a clear legal framework that would protect consumers from ever more sophisticated online fraud, largely perpetrated by organised criminals. PIMFA and our partners in this campaign continue to urge the Government to include financial harm in the Online Safety Bill. Doing so would save thousands of victims suffering enormous financial and mental distress and would be one of the best possible ways to disrupt organised crime.”
Notes to editors
- Scammers stole nearly £120,000 from Ms Jackson, the first payment was made in June 2020. First Direct, her bank, has so far refunded her half that amount.
- Around the same time that the scam started, Bear Grylls posted a message on his website and Twitter account about scammers using his identity in fraudulent ways to sell Bitcoin online with one follower suggesting they had “escalated” 30 scam bitcoin campaigns featuring Bear Grylls to Facebook.
Full list of 17 organisations that have signed the letter:
- Age UK
- The Association of British Insurers
- The Association for Financial Markets in Europe (AFME)
- Carnegie UK Trust
- City of London Corporation
- City of London Corporation Police Authority Board
- City of London Police
- Innovate Finance
- The Investment Association
- Money and Mental Health Policy Institute
- Personal Investment Management & Financial Advice Association
- B&CE Ltd, provider of the People’s Pension
- UK Finance
- Victim Support
Rights of reply
A spokesperson for First Direct said: “We would like to offer our sincerest sympathies to Ms Jackson, and fully appreciate how the situation has impacted her. Sadly, there are unscrupulous individuals who carry out criminal activities without any regard for the effect this will have on their victims.
“Although we believe Ms Jackson could have exercised more caution and carried out further checks before making the payments, we could also have offered more effective fraud warnings. So on that basis we’ve refunded 50% of the payments made.”
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