Consumers need protection from online scams, says MP
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The following is a speech to be made in Westminster Hall by Yvonne
Fovargue today on protecting consumers from online scams Access to
the internet, whether for shopping, work or leisure, has been a
boon to millions of people. But it has also brought its own
problems, not least in providing greater opportunities for
fraudsters and scammers in an area where there is too little
protection or redress for consumers cheated out of their money.
Scams and fraud are now the most prevalent types of...Request free trial
The following is a speech to be made in Westminster Hall by
Yvonne
Fovargue today on protecting consumers from online
scams
Access to the internet, whether for shopping, work or leisure, has been a boon to millions of people. But it has also brought its own problems, not least in providing greater opportunities for fraudsters and scammers in an area where there is too little protection or redress for consumers cheated out of their money. Scams and fraud are now the most prevalent types of crime in the UK. And, according to Action Fraud, the UK’s national reporting centre for fraud, 85% of this is what they describe as cyber-enabled, that’s committed on the internet to you and me. That figure of 85% is in the year to June 2020; it has almost certainly gone up since then, what with the constraints placed on people’s lives by Covid-19, constraints which have encouraged people to spend more and more time online. And the more time they spend online, accessing websites or social media platforms, the more susceptible they are to becoming the victim of a scam. Not because they are stupid, or even naive. But because they often underestimate how difficult it is to spot online fakery and fraud and also because they often overestimate the vetting processes undertaken by established online marketplaces and online hosts. To say that online scams are becoming ever more sophisticated is perhaps an understatement. In their briefing, the ABI say that their own members often struggle to spot sites when they are fake or to pinpoint fraudulent activity. If the staff of insurance companies struggle what hope is there for customers? Money scams come in many forms; investment scams, banking scams, insurance scams, pension scams, conveyancing scams, purchase scams (often involving non-existent products) as the Cats Protection League told me, romance scams (involving fake partners) and even scams targeting those seeking debt help. They have one thing in common, though, they all about duping people out of money. Often big money. Action Fraud figures show the value of losses from reported incidents in the year to June 2020 was £2.3 billion. Individual amounts can be eye-watering, often involving tens, or even hundreds of thousands of pounds. Whole life savings, gone. The proceeds of a house sale, gone. Scammers use an array of trickery: Fake websites or adverts are a favourite, particularly ones mimicking established brands or sites, sometimes including fake celebrity endorsements. Fake reviews are a big problem on many of the world’s biggest websites, as Which? has consistently shown. The consumer body previously uncovered evidence of fake and suspicious review activity on eBay, Facebook and TripAdvisor. New research suggests that Amazon is struggling to spot and prevent sellers from using unscrupulous tactics to manipulate their ratings. For example, blatant evidence of sellers incentivising shoppers to write positive reviews, using free gifts or vouchers, many in a suspiciously short space of time and with a suspiciously high number of review images. Worryingly, there seems to have been a more than 30 per cent rise in the proportion of unnatural reviews on Amazon between March and August following the first coronavirus lockdown. With Black Friday a few weeks’ away this is especially worrying. This is important because customers take notice of online reviews. The Competition and Markets Authority (CMA) has previously estimated that £23 billion a year of consumer transactions are influenced by online reviews and many people will be looking to use them as a helpful guide to get a good deal in the sales. I understand that Amazon says it has clear policies that prohibit sellers from engaging in this type of activity, and has mechanisms in place to analyse reviews, but Which? is concerned that its approach is not effective enough and that firmer action is needed to address this problem. I think they are right. Does the minister agree? The losses customers suffer from responding to fake or ‘impersonator’ adverts can be substantial. A recent Which? investigation highlighted one victim who lost almost £100,000 after clicking on an online investment advert featuring fake celebrity endorsements from Martin Lewis and Deborah Meaden while another lost £160,000 after clicking on an ad for an ‘Aviva’ investment scheme. Criminals are also use social engineering and grooming techniques, targeting vulnerable consumers in particular, sometimes as a follow-on from the initial contact made from accessing fake sites or online adverts. The ABI have told us tell us about an increasing proliferation of fake websites in the market operating Authorised Push Payment scams, with some of their members dealing with 32 fake websites at the same time. Authorised Push Payment occur when someone is tricked into authorising a transfer of money to an account that they believe belongs to a legitimate payee, but is in fact controlled by a scammer. Payments related to APP scams can be made over the phone, online, or in person, and most are completed instantly. Data from UK Finance shows that in the first half of 2020, £208 million lost to APP scams – with most fraud occurring on personal accounts (personal – £164 million; non-personal or business – £44 million). Victims of such scams were reported to have lost their entire life savings, having been groomed into handing over the money, by staff at fake call centres and by fraudsters who often use the names of genuine financial services sector staff. When it comes to APP there have been advances. The CRM Code, which came into force in May 2019, is designed to give people the confidence that, if they act appropriately yet fall victim to an APP scam they will be reimbursed. This is welcome, but figures from the Payments Regulator show that between May 2019 and September 2020, only 40-45% of losses were reimbursed (paid by the victim’s bank) or repatriated (money recovered and credited to the victim’s account). So, bank customers are still being left out of pocket and the banks really need to do more. Credit must be given to the TSB who are going further than the code and who do not believe they have had more fraudulent claims because of this. Furthermore, as UK Finance’s figures show, fraud is still taking place. More needs to be done to prevent customers being fleeced in the first place. We are talking of serious amounts of money here and it would be good to hear from the minister if he has any solutions to the APP problem? I described APP scammers as ‘grooming’ their victims. ‘Groomed’ is an important word here. We are used to hearing about paedophiles grooming their child victims online, building up trust with over time. Being friendly. Hiding their true colours. Slowly ensnaring their victim. It is not inappropriate to use the word in the context of financial scams. It works with push payments, where trust is key. It is also most clearly seen in romance scams, where a lonely victim is lured into a pretend relationship over many months, tempted with fake photographs and a fake backstory, and with a scam that is only revealed after thousands of pounds have been handed over for the non-existent medical bills of a non-existent relative. I had a constituent who handed over thousands of pounds in Amazon vouchers to a fake USA army major. The photograph on his facebook page had been used over 50 times with different names. Surely FaceBook should have an algorithm that spots such suspicious activity. It is all too easy to say that people should be more careful. Of course, they should. But, as I said, the scams are getting ever more sophisticated and even the most experienced people cannot always spot them. They also prey on vulnerable and lonely people and, frankly under Covid-19 people are becoming more vulnerable and lonely, not less so. What is more, as I said at the outset, consumers often think they are protected from such double-dealing. After all, can we really blame people who assume that an advert placed on a well known platform is legitimate or a that product has been vetted or checked. After all, that is the sort of protection they are used to getting when shopping on the high street. The sad fact is that online platforms currently have no legal obligation to protect users against scams on their sites. Surely this has to be wrong, when they are taking revenue from these sellers. Why should the consumer have to shoulder the entire burden if things go wrong? Does the minister agree with me that the burden of responsibility should be with the platforms and sites, who have the data and tools on their side, and not with the consumer, who is at a clear disadvantage? I am sorry but voluntary initiatives do not work. It is clear that voluntary initiatives introduced by platforms to date have been insufficient to tackle online scams. For example, research shows that only 30% of Facebook users were aware of the social media site’s scam advert reporting tool while only 10% of people had used it. That’s not good enough. And while I commend the FCA for producing literature warning customers wanting of possible online scams, there is an irony where the regulator has to resort to paying for adverts on Google, who are taking a similar revenue for the fake adverts themselves. A double whammy for the search engine! I am obviously not against measures to raise public awareness of scams. There is clearly some very good work being done. For example, I know that the freely available, impartial Pension Wise guidance has had a real the impact on people’s awareness of pension scams. Many organisations, from regulators, to charities to advice agencies have very good, helpful advice about how to avoid scams on their websites. But it is still not enough to prevent serious fraud. What we need is a strong regulatory framework, with online platforms given a legal responsibility for preventing scam content from appearing on their sites, as well as more responsibility for taking quick action to remove harmful content when it is reported. This would quite rightly bring them more in line with consumer expectations. The Government has a perfect opportunity to deliver this in the upcoming Online Harms Bill. By including financial harms in the online harms legislation, there will be a greater responsibility on search engines and social media platforms to identify and remove harmful content. At present the White Paper is limited in scope. Platforms and sites will be required to take reasonable steps to identify and prevent user-generated child sexual exploitation and abuse and terrorist content. Given that the social engineering and grooming techniques employed by online scammers to target victims are similar to those used by these criminals, the same requirement should be extended to cover scam content. Does the minister agree? There is also a strong case for ensuring that the Bill covers both paid-for advertising and user-generated content, since scammers use both avenues to get to their victims. As Which? points out, a failure to tackle user-generated scam content will result in scammers adapting to exploit this loophole and moving from posting scam ads to organic user-generated scam content. There is support for this, from a wide range of different organisations, including Which? UK Finance and the FCA. Can the minister make a commitment now to widen the scope of the Online Harms Bill as I have suggested? If not, will he commit to introducing proposals for further legislative action to effectively protect people from online scams? The Government has said its objective is for the UK to be the safest place in the world to go online. Now is the chance to make that promise a reality. The full transcript of the debate will be sent as soon as it is available. |