Tech teams advised to offer higher safety towards on-line fraud
Tech companies should be forced to better protect their users from online scammers. MPs have been urged as police admit billions of pounds may have been lost to pension fraud.
Senior police officers and regulators appealed to MPs on Wednesday as they said cases of online investment fraud increased significantly during the coronavirus pandemic while people were more financially vulnerable and spending more time at home.
In recent years, police and regulators have stepped up efforts to protect savers from the growing risk of investment fraud, which promotes promotions to trick individuals into investing their money in “too good to be true” investment opportunities.
“There have been 12,000 cases in the past 12 months [of investment fraud] reported, which is a significant increase over the past few years, “said Mark Steward, director of enforcement and market oversight for the Financial Conduct Authority, a House of Commons Work and Pensions Select Committee hearing on investment fraud.
“Covid and Lockdown have put more financial pressure on people.”
Mr. Steward told the committee that online marketing of real investment opportunities has also increased, but they are fraudulent.
“That has really accelerated in the last two or three months, maybe because people spend more time at home or more time online,” he said.
Mr Steward said that unlike television companies or newspapers, there is little action regulators can take against a technology or social media company that advertises investment fraud.
“Social media is largely unregulated,” he told the committee. “There are few gateway controls for allowing advertising in search engines or on Twitter or Instagram. That concerns us. “
The FCA has started a dialogue with social media companies, Steward said, in order to find ways to eliminate investment fraud. Although the initiative of the regulatory authority was received “positively”, it did not reduce the number of cases of online fraudsters identified.
In 2019, Facebook launched a dedicated scam report reporting tool after Martin Lewis, a well-known consumer activist, launched a lawsuit against the social media giant after a year in which more than 1,000 scam ads misusing his name or picture had platform.
Facebook, Twitter and Google did not immediately respond to requests for comments.
Losses from reported pension fraud have been around £ 30 million over the past three years, Nicola Parish, frontline executive director for regulation at The Pensions Regulator, told MPs.
But Commander Clinton Blackburn, National Coordinator of White Collar Crime with the City of London Police, told the hearing that it was “plausible” that billions in pension fraud losses could be exceeded because so many crimes were not reported.
The government has proposed measures under the Online Damage Act to force tech companies to improve online security for tens of millions of their users. However, this does not currently contain any provisions regarding investment fraud.
“We certainly see a good argument that investment fraud is classified as online damage,” Steward told the committee.
Commander Blackburn added that it was a “missed opportunity” that investment fraud was not included in the bill.
“The online world is an increasing vector for fraud,” he said. “The online world needs to do more and we all think some form of regulation is necessary.”