Tech giants must do more to tackle fraudulent adverts and criminal activity, politicians say.
Many fraudsters rely on posting adverts on platforms such as Google to lure victims in. The fact the adverts appear on such a well-known search engine is taken as a sign of their legitimacy by many consumers.
Google not only profits from the fraudsters paying for these adverts, but also from the Financial Conduct Authority (FCA) when it posts warnings about the scammers.
Criminals also use social media platforms such as Facebook to contact possible victims.
The Work and Pensions Select Committee has published a report saying pension fraud can be “devastating” to consumers, who often “suffer lifelong financial harm”.
Guy Opperman, minister for pensions and financial inclusion, says: “Clearly, this is a decision way above my pay grade. It is a decision not even in my Department, but I have very strong and unequivocal views that what is going on, and what Google and Facebook are allowing to happen, is utterly unacceptable.”
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More than £30 million was lost to pensions fraudsters between August 2017 and 2020, according to police scams unit Action Fraud.
But this is likely to be the tip of the iceberg.
The Pension Scams Industry Group, a voluntary body set up to tackle pension scams, estimates that £10 billion has been lost by 40,000 people to pension scams since 2015.
The report was published five years on from the pension freedoms rules, which allow consumers to access their defined contribution retirement pots however they want and without the need for financial advice.
However, this led to an increase in fraud, as criminals sought to access some of this cash.
Mark Steward, executive director of enforcement and market oversight at the Financial Conduct Authority regulator told the committee: “Social media is largely unregulated in this space, and there are few gateway controls on the admission of advertising into either the search engines or Twitter or with Instagram. That is something that concerns us”.
The government is due to bring out an Online Safety Bill, but fraud is not currently part of that legislation.
A Google spokesperson said: “Protecting consumers and credible businesses operating in the financial sector is a priority for us. We take dishonest business practices and misleading ads very seriously and consider them to be a violation of our policies.”
Facebook would not comment.
Facebook has a worldwide safety and security team of 35,000 people, and donated £3 million to the Citizens Advice charity to help tackle online scams.
Rebecca O’Connor, head of pensions and savings at interactive investor, said: “Criminals are advertising on Google and Facebook and defrauding people out of millions of pounds. A crackdown by regulators and the websites themselves is long overdue."
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