Online financial scams are becoming more and more commonplace. In 2020, the Financial Conduct Authority issued 1,200 consumer warnings of unregulated or fake companies running scams via social media – double the figure seen in 2019.
It is clear that something must be done to tackle the issue – not just by the social networks themselves, but by any business allowing such advertising via their site.
With this in mind, the late June announcement by Google that they are “clamping down on financial fraud” has been welcomed by many. So, what exactly is Google planning on doing, and what difference could it make?
Google’s plans to tackle financial fraud
Google’s new regulation, which comes into effect on August 30th 2021, requires that any business that offers financial services on their platform must “demonstrate that they are authorised by the UK Financial Conduct Authority or qualify for one of the limited exemptions described in the UK Financial Services verification page”. This new requirement – which comes after 18 months of work and consultation with the FCA – will be added to the Google Ads Financial Products and Services policy from August 30th, and will apply to any financial services advertiser targeting the UK.
This follows tightening of rules that Google had already made, including requesting advertiser identity verification, and updates to their misrepresentation policy, banning terms that suggest a product can offer high reward for minimal risk, and restricting the rates of return that can be advertised.
How is this likely to help?
According to research from UK Finance, 7 out of 10 financial scams originate online – a figure which is significantly higher when focusing on investing scams alone. The research team believes that the pandemic has had a significant impact, with more and more people spending more time online leading to fraudsters adapting their tactics and channels.
The Google announcement has been welcomed by Which?, who state that their “research has repeatedly exposed scam ads on Google that can have devastating financial and emotional consequences for victims”. However, despite their size, it is not just Google that needs to tackle the problem. Which? firmly believes that the Government should mandate all social media providers to take a similar approach to stamping out financial fraud.
“Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.”