An influential group of British MPs have called on more responsibility to be placed on big tech companies when it comes to online scams.
Big Tech companies whose online platforms carry advertisements for scams should be made to reimburse victims as part of wider efforts to combat a growing epidemic of online fraud, British lawmakers said.
While banks have signed up for a voluntary code to reimburse fraud victims who do enough to protect themselves, there is not sufficient regulation governing social media and other websites where victims are often first lured in, Mel Stride, chairman of the UK parliament’s cross-party Treasury committee, told Reuters.
"The government should look at some kind of arrangement that makes the polluter pay," he said.
"Online platforms are hosting this stuff, not really putting enough effort into weeding it out, and indeed financially benefiting because they're getting the advertising revenues," Stride said.
Stride's comments came as the Treasury committee on Wednesday published the findings of a report on economic crime, which called on more responsibility to be placed on Big Tech companies.
“The government must consider why economic crime seems not to be a priority for law enforcement, and how it can ensure it becomes one. It must ensure that law enforcement agencies are appropriately resourced to tackle the scale of the problem,” the Treasury committee warned.
TechUK, a trade body that represents major tech companies in Britain, including Facebook, Twitter and Microsoft, declined to provide an immediate comment.
“The government should seriously consider whether online companies should be required to contribute compensation when fraud is conducted using their platforms,” the report said.
It noted in December that TechUK said Facebook (now known as Meta), Twitter and Microsoft had committed to requiring potential financial services advertisers to be authorised by the Britain's Financial Conduct Authority, following similar steps taken by Google, TikTok and Amazon.
But the report said there was no set timeline for these changes and other major online platforms have not followed suit.
It also called for greater protection against money laundering in the cryptocurrency industry. Scams using crypto and NFTs have risen sharply as they have soared in popularity.
What do the social media scams look like?
A report released last week from the US Federal Trade Commission (FTC) also highlighted the rise of social media scams. More than 95,000 US consumers told the FTC that they had been scammed in 2021 with a con that started on social media.
The largest number of reports came from people who lost money to online shopping scams. Most of the reports about online shopping scams involved someone who ordered a product they saw marketed on social media that never arrived. Often they would be redirected to “lookalike” websites designed to fool them into thinking they were buying from a legitimate retailer.
Consumers who listed the social media platform where the undelivered products were marketed most often named Facebook or Instagram. These social media companies are paid to host the scam ads.
UK government response
The UK government is due to respond to the report's findings that not enough is being done to prevent the growing online fraud epidemic, and that fraud-fighting efforts should be centralised under one minister or department.
Britain has become a global epicentre for bank scams, Reuters reported in October, with a record £754 million (€903.5 million) stolen in the first six months of 2021, up 30 per cent from the same period in 2020.
"We think the government's been too slow in various areas to really catch up with it...it's people being, quietly in many cases, defrauded of large amounts of money, people losing life savings," Stride said.