PIMFA report from the trade body’s annual conference, PIMFA Virtual Fest 2.
PIMFA, consumer rights group Which?, UK Finance, the Financial Services Compensation Scheme (FSCS) and the chair of the Work and Pensions Select Committee the Rt. Hon. Stephen Timms MP, all called yesterday (10 March) for online scams to be included in the Government’s forthcoming Online Safety Bill.
Speaking at PIMFA’s Virtual Fest 2, Work and Pensions Select Committee chair Rt. Hon. Stephen Timms MP said: “At the moment online platforms are making money from scam adverts and fake websites and they are making money from the Scam Smart [campaign] adverts from the Financial Conduct Authority as well. I’ve called on the Prime Minister in the House of Commons to ensure that the planned bill does tackle online financial harms. He recognised the problem, he said it was a growing problem and he said we will look at what we [the Government] can do.
“It does seem to me this imminently forthcoming bill must tackle this problem. We can’t leave this for some possible future legislation.”
Mr Timms added the Work and Pensions Select Committee had heard evidence that over 40 000 savers have been scammed in the first five years of pension freedoms. He added the National Economic Crime Centre estimates fraud accounts for about a third of all crime in the UK but about one percent of police resources.
His comments come as the latest available data showed that there were 89,153 reports of fraud at an estimated cost to victims of £406.5m since 1 January 2021(1). Within that figure there were 4,450 reports of investment fraud valued at £109.6m since 1 January 2021. Earlier in the day at Virtual Fest 2 Financial Conduct Authority’s (FCA) director of life insurance and financial advice Debbie Gupta said data the regulator had collected data suggesting victims of scams lost £82,000 on average.
Meanwhile detective inspector Steve Jackson of the National Fraud Intelligence Bureau (NFIB) told Virtual Fest 2 delegates: “The online space has become the new crime scene. The pandemic has created a digital adventure playground for serious or organised crime groups.”
He added the NFIB had seen an almost 50% rise in reports of online fraud in the past year.
Rocio Concha, director of Policy and Advocacy at Which? and FSCS Chief Executive, Caroline Rainbird also outlined why they saw a need for financial harm to be included in the Online Safety Bill.
Ms Rainbird said the FSCS was seeing reports of at least one new fake investment website and at least one phishing attempt every day to the authorities. She added: “We believe that this is just the tip of the iceberg and that the true amount of harm is likely to be much higher than we know about.”
She said that every day FSCS staff spoke to vulnerable consumers who have been scammed and were “facing a really dark future”.
She added: “People tell us they feel ashamed, embarrassed and angry. They often don’t tell their families and have feelings of real despair and very, very sadly sometime suicidal thoughts.”
Scams and fraud were becoming ever more sophisticated, she said which was why the FSCS believe financial harms should be included in the Online Safety Bill.
Rocio Concha, director of Policy and Advocacy at Which?, agreed stating: “Consumers now face a staggering range of increasingly sophisticated scams online, and we and others have demonstrated these crimes can have a devastating financial and emotional impact on victims.”
She pointed to Which? research that showed a third of people that used Facebook didn’t’ know they could be looking at adverts for fake products while a quarter were unable to identify a fake investment product. (2)
Ms Concha added that because online platforms currently have no legal responsibility to prevent fraudulent content from appearing on their sites, consumers are left alone to protect themselves from sophisticated scammers.
“There needs to be a greater focus on ensuring consumers are not exposed to scam content. The government now has a perfect opportunity to require online platforms to do more to tackle the fake and fraudulent digital content that leads to scams in the proposed Online Safety Bill,” she said.
PIMFA, UK Finance, Which? the charity Money and Mental Health, and the Carnegie Trust UK are among a growing group of organisations from within the financial services industry, charities, consumers groups, and regulators who believe the Online Safety Bill is an opportunity to prevent the future growth of online scams, alongside other forms of online exploitation, much of which is being funded by online fraud and is perpetrated by organised crime.
Katy Worobec, managing director of Economic Crime at UK Finance, said: “The banking and finance industry is tackling fraud on all fronts, but we need other industries including the online platforms exploited by criminals to join the fight. Including economic harm in the Online Safety Bill would be a major step forward in ensuring the tech giants take responsibility for their part in protecting consumers from this threat.”
Liz Field, chief executive of PIMFA, commented: “It is vital that people are protected from all forms of online exploitation. It is clear the Online Safety Bill offers the opportunity to create a legal framework to prevent people becoming victims of financial harm and that this has significant support from across the financial services industry, consumer rights groups like Which? mental health charities and the Financial Services Compensation Scheme.
“The internet has inadvertently facilitated fraudsters for many years but a large number of them could be prevented from making victims of consumers with greater cooperation from Domain Name Registration Services, Internet Service Providers and online platforms such as social media and search engines.
“I hope the government listens to our collective concerns and acts upon them.”
1) https://colpolice.maps.arcgis.com/apps/opsdashboard/index.html#/60499304565045b0bce05d2ca7e1e56c
2) https://press.which.co.uk/whichpressreleases/which-calls-for-action-over-emotional-and-financial-toll-of-online-scams-as-tech-giants-fail-to-adequately-protect-users/
