Social media companies serve as a gateway for fraudsters, says Finanzwächter | Fraud


Social media sites like Facebook and Instagram serve as “gateways” for scammers, the City Watchdog warned, as it has demanded that they crack down on financial fraud.

While the Financial Conduct Authority praised Google for changing its terms and conditions on financial advertising this month, the regulator’s enforcement chief said other tech companies are lagging behind.

“Social media sites are practically a gateway through which fraudsters can access large numbers of people by searching online,” said Mark Steward during the FCA’s annual public meeting on Tuesday.

“We are alerting them that we expect them to be involved in this community protection process,” he said, adding that otherwise the FCA “would have to intervene”.

The FCA has had a longstanding battle with social media companies and search engines amid a surge in online fraud, which, according to the Home Office, accounts for around 86% of all fraud cases in the UK. The trend has been partially attributed to the Covid crisis, which has led to more criminal activity on the internet.

In total, fraudsters stole around £ 4m a day from UK consumers in the first half of the year, according to banking lobby group UK Finance, which warned last week that the scale of the fraud posed a threat to national security.

A coalition of banking and tech companies has set up an emergency hotline, available on 159, so people can report and investigate financial fraud. The hotline connects callers directly to your bank’s fraud prevention service.

Google was commended Tuesday by the regulator for changing the terms and conditions for online advertisers by ensuring that none of its priority search results contain financial promotions unless published by FCA authorized companies.

Lengthy negotiations with the search engine followed. FCA CEO Nikhil Rathi announced this month that he has held more meetings with Google than any other company since joining the regulator last year.

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Search engines and social media sites have previously been exempt from reviewing financial advertisements as EU rules did not extend to online platforms. Although the FCA doesn’t directly regulate social media sites, it has tried to use its post-Brexit powers to require additional reviews.

The changes made by Google have already had an impact on online fraud rates, said Rathi. “We expect the others to take the issue just as seriously,” he said. “We expect Facebook, Twitter, Instagram and others [do so] also, and we will get in contact with them. “

A Twitter spokesperson said, “It is against our rules to use fraud tactics on Twitter to get money or private financial information,” adding that the platform has “taken robust measures against anyone who breaks its rules”.

A spokesman for Facebook, which also includes Instagram, said the company was devoting “significant resources” to fighting fraud.

“Although no enforcement is perfect, we continue to invest in new technologies and methods to protect people on Facebook and Instagram from these scams,” said the spokesman.

The Guardian also contacted Google to comment.

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