The UK Online Harms Bill is a landmark moment amid a wider move to greater online safety. The bill was revealed last year but is yet to make it onto the statute books because of parliamentary delays caused by Covid-19. If not this year it is expected to become legislation next year. However, critics are asking why it doesn’t cover online fraud which can also cause significant suffering for victims.
  • The bill requires social media companies to remove and limit the spread of harmful content or face fines of billions of pounds.
  • It also requires platforms to abide by a new code of conduct that sets out their responsibilities towards children.
  • The bill further requires the most popular sites to set their own terms and conditions for codes of conduct, and face fines if they fail to stick to them.
Despite criticism the bill certainly has teeth. Ofcom, which has been confirmed as the regulator, will have the power to impose unprecedented fines of up to £18 million or 10% of global turnover.

This would leave a company such as Facebook potentially paying a fine of approximately £5 billion for serious breaches. In contrast, GDPR laws cap fines at €20 million (£18m) or 4% of global turnover. Ofcom will also have the power to block services from the UK entirely.

Critics however most notably point to the fact that it doesn’t cover online scams and fraud. For instance, ads on social media platforms that encourage consumers to buy unsuitable, fraudulent or non-existent, investment products are not uncommon. These include:
  • Pension liberation scams
  • Boiler boom scams which offer shares and bonds
  • Ponzi or pyramid schemes
Staggering online fraud rates

According to the UK Financial Services Authority in 2020, investment frauds accounted for less than 10 per cent of all reported crimes but 25 per cent of all financial losses totalling £501 million. Figures from Action Fraud for 2020 show there were 356,649 reported cases of fraud in the UK with an estimated cost of £2.1bn.

Further recent figures from Action Fraud also revealed that £78 million was lost to cloned website fraud, where fraudsters copy an investment firm’s website in order to steal from unsuspecting customers.

Given that the UK’s National Crime Agency (NCA) believes that only 20 per cent of frauds are ever reported, it is believed the number of victims of fraud, and the amount of money lost, is far higher than currently being reported.

Confidence destroyed

UK consumer champion Which? has taken up the baton on behalf of consumers and is pressing the government to outline its plans to tackle scams on online platforms. As a part of this move Which? recently highlighted the devastating impact of financial fraud on victims. Scam victims told Which? that it had destroyed their confidence in themselves and their ability to trust other people.

In one case a victim in his eighties lost more than £50,000 in retirement savings after clicking on a fake Invesco company at the top of his Google results page.
  • Despite checking if the company was legitimate, he had been speaking with a fraudster, who assumed the name of a real compliance manager for Invesco. He only discovered it was a scam when he didn’t receive confirmation of the investment and was unable to contact the company.
  • This victim has since been reimbursed under the terms of the authorised push payment scams voluntary code, after his bank decided he had done his due diligence and was not to blame. Prior to this the victim said he had many sleepless nights and experienced consistently high levels of stress.
Emotional impact

A European Commission survey, “Scams and Fraud Experienced by Consumers”, found that eight in 10 (79%) fraud victims experienced a negative emotional impact, while a quarter (24%) experienced a negative financial impact.
  • More than half (57%) of those surveyed experienced emotional or physical harm, showing that even where no money is lost, or where it is ultimately returned, the very act of betrayal represented by a scam often causes significant suffering.
As Which? pointedly states online scams are happening on an industrial scale and the impact can be devastating, with hundreds of fraud victims a week showing worrying signs of severe emotional distress.
  • Which? is asking why the Online Harm Bill isn’t attempting to stem the growing tide of sophisticated scams by criminals online and why isn’t it extending legal responsibility to platforms to tackle fake and fraudulent content posted by scammers on their sites?
It’s a moot point and given that the bill hasn’t yet made it into legislation there is room for amends that cover online fraud too. However, this is by no means guaranteed and there’s a sense that the government wants to drive the bill through as it is.

In the coming weeks we’ll be featuring further blogs that cover online fraud such as investment and boiler room scams and how to avoid becoming a victim. Watch this space. We also recommend using software such as BullGuard Premium Protection to safeguard payment card and bank account information.