The government wants search engines and social media platforms to do more to stop them.
Over the last year, there has been a 36 percent rise in fraud crimes, with more than 420,000 offences on official record. The spike in fraud means it is now the most common crime in England and Wales, costing the UK £137bn a year. Most of these fraud crimes take place online. It is estimated that 70 percent of the fraud schemes in 2021 originated on online platforms - like social media and search engines - through unregulated, prepaid adverts.
Such online scams can trick people into losing a lot of money. In the first half of 2021 it was recorded that scammers stole £4 million a day from UK residents via impersonation scams. This is where scammers send emails, texts and phone calls posing as official companies, which cause people to give their financial information to a site they believe to be official and trustworthy. More than half of the money stolen was not refunded by banks.
Becoming a victim of online fraud can be financially and emotionally distressing for people. To assess the social impact of scams, economists often translate the changes in wellbeing into monetary terms. They usually do this by asking people how much cash they’d need to pay or receive to change the way they feel about something. Economists do this money conversion thing because it can be hard to assess intangible things like mental health and wellbeing if they cannot be quantified in a way that is easy to understand and compare with other stats. The total cost of scams to victims' wellbeing totalled £7.2 billion a year, as those targeted suffered from anxiety and lower levels of happiness after the incidents. Indeed, this impact of wellbeing and mental health was higher than the financial hit of scams. Wellbeing had a cost of £3,684, while the average amount lost to a fraud was £600.
To tackle this problem, the UK government has updated the Online Safety Bill (a set of laws that direct sites on how to deal with harmful content) to try to combat scam adverts on websites. The most popular platforms and search engines - including Google, TikTok, Facebook, Instagram and Twitter - will now be required to put in place processes that will block prepaid fraudulent ads from appearing on their platforms and to remove any that slip through the net.
Another method being used to tackle the problem is to pay the platforms to run counter ads. The Financial Conduct Authority (FCA), a regulator that monitors the financial services industry to protect consumers, has paid online platforms like Google and TikTok so it could place adverts warning people about the scam adverts that were being published on these same platforms.
But some people believe neither of these approaches go far enough. The consumer group Which? has stated that the Online Safety Bill rules need to also cover ads on third-party websites, which are not mentioned in the bill, to fully stop the public from being exposed to scam adverts. People have also argued that social media platforms and search engines still have too much of an incentive to not try that hard to get rid of fraudulent adverts.
For one thing, these platforms make a lot of their money from online advertisements: Google alone made $61.2 billion from advertising in the fourth quarter of 2021. Cutting down on the amount of scam ads means giving up some of this revenue. For another, having to check over the contents of the adverts they publish would use up more of an online platform’s company resources. For example, they may have to hire and pay a team of people to flag scam adverts and take them down. While these companies certainly have the money to spare, they may be reluctant to spend it on something they don’t regard as beneficial to themselves. After all, the proliferation of fraud ads doesn’t seem to have had an impact on how many people use social media platforms or search engines.
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