Social media companies should refund people who have been defrauded by scam adverts on their platforms, an MP had urged.
Julian Knight, chair of the House of Commons digital, culture, media and sport (DCMS) select committee, said it was a “disgrace” that firms had not put in place sufficient safeguards to stop scam artists paying for advertising space on users’ feeds.
Twitter and Meta, the company behind Facebook, Instagram and WhatsApp, were among a number of major online platforms that announced in December they will only host adverts for financial products approved by the Financial Conduct Authority (FCA) regulator.
Mr Knight, the Conservative MP for Solihull, said the change should have been made years ago. Speaking to representatives from YouTube, Meta, TikTok and Twitter, he said: “People have lost thousands of pounds; some people have lost their entire livelihoods. Frankly, we have had some people commit suicide as a result of the scams.
“And you have continued to take advertising throughout the entire time from organisations which are not FCA-authorised. And only now are you pulling your finger out and bringing in that very crucial change. You have just not done enough.”
Mr Knight added: “You ought to pay back the money that has been defrauded off the British public for many years while you’ve been taking adverts that weren’t FCA-authorised.”
It comes as the UK government’s draft Online Safety Bill – proposed legislation aimed at tackling harmful content on the internet – is making its way through Parliament.
Although it provides protection against user-generated scams, paid-for adverts are currently not covered.
In total, £355.3million was lost due to fraud where people had authorised a transaction in the first half of 2021, according to figures from trade body UK Finance.
Richard Earley, UK public policy manager at Meta, said the social media giant is continually working on measures to prevent scams making it onto its sites.
“We have been working to try and tackle these uses of our platform ever since we began to run adverts many years ago”, he told the DCMS sub-committee’s inquiry into online harms and disinformation.
“One of the big challenges we face is that fraudulent advertising scams are, by their very nature, designed to be difficult to tell apart from authentic advertising.
“That’s why we’ve invested so much money in not just the pre-uploading review but also the ability to see how scams are performing and use technology to look at inauthentic signals.”
He added: “We have a system which ensures that when someone wants to place an advertisement on one of our platforms, that goes to review for compliance with both our ordinary policies and higher advertising policies.”
In October, consumer expert Martin Lewis told a separate committee examining the draft Online Safety Bill it was “ridiculous” the proposed legislation did not provide protection against paid-for adverts.
He described how a woman with bladder cancer lost tens of thousands of pounds earmarked for her granddaughter's wedding after investing in a venture purportedly endorsed by him online.
Appearing close to tears, he said. "If you wonder why I get so passionate, I have spent 20 years trying to do consumer protection work and I see people's lives being destroyed [by scam adverts]."
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