Does big tech have a responsibility to prevent online scams?

By Gareth Jones

Most of us will be familiar with the fake texts and emails sent by fraudsters. I, for one, am regularly contacted by “HMRC” “HSBC” and “Barclays”, as well as people claiming to be my mobile and/or broadband provider and Royal Mail. Usually, they invite me to click on a link, that – unless you look carefully – looks legitimate and asks you to enter your personal details.

These messages tend to be very good at motivating you to click. They prey on your day-to-day hopes and fears, promising or threatening you with anything from a tax rebate, a missed parcel, a queried transaction, an unpaid debt or fine, your broadband being disconnected, or (more recently) an early Covid vaccine appointment.

While you still may occasionally get the odd foreign prince email written in broken English, these days the messages tend to be a lot more sophisticated. Some scammers have enough knowledge of your circumstance to exploit you (e.g. claiming to be a builder or solicitor if they know you’ve been transacting with one). A (unnamed) colleague tells me he has recently received threatening emails from scammers claiming to have knowledge of his email, online password and his “spicey” internet browsing history – which would be shared with the contacts in his address book, unless he paid up. While he personally did not fall for such a scam, it’s clear that such an approach has a higher success rate than those promising you a share of their royal wealth.

If it seems like these types of messages and instances are becoming a more regular occurrence – it’s because they are. 2020 saw a surge on online scams and fraud. According to UK Finance, impersonation scams, in which criminals impersonate trusted organisations to trick victims into handing over their money, almost doubled to 39,364 cases in 2020. The pandemic and lockdown have obviously been major drivers in this surge, changing our lifestyles and driving us online – with more transactions taking place online than ever before – meaning we are more susceptible to technology-enabled scams.

Many of these types of scams are known as Authorised Push Payments (APP), where customers are tricked into authorising a payment to an account controlled by a criminal. While some of these can involve relatively small amounts of money, some of them can be huge and devastating for consumers. At the larger end of the spectrum are investment scams, where people are convinced to move their money to a fictitious fund or to pay for a fake investment. These types of scams, according to UK Finance, saw the highest increases of losses in 2020, compared with any other type of APP fraud. Such fraud has managed to exploit people’s heightened financial insecurities during the pandemic, promising generous returns, promoted online through adverts on search engines.

One area that has been particularly affected by this is pensions. Pension scams typically work by convincing retirees (or soon-to-be retirees) to transfer their pension out of their existing pensions scheme and into new too-good-to-be-true scheme or fund (most or all of which, they’ll never see again). The scale and impact of the losses on an individual can be devastating and life-changing – so much so that tackling it has become a priority for policymakers and regulators. In the past few months, government and regulators have called on the pensions industry to do more to protect scheme members. Meanwhile, the House of Commons Work and Pensions Select Committee has published a report calling on the Government to 'act quickly and decisively' to protect pension savers and that global tech firms such as Google should be held to account for hosting pension scam adverts.

It is widely acknowledged that tackling online fraud and scams requires a cross-sector effort - involving banks, wider financial services firms and telecoms companies. As the increase in online scams has become more apparent, policymakers are now focusing on the role that technology companies should play in addressing it. There is a growing group (containing politicians, law enforcement agencies and the financial services industry) who believe legislation should be introduced that forces online platforms take action to protect customers and take down scam adverts and fake profiles. Some consider that by hosting scam adverts and fake profiles, Google and Facebook and other online platforms are effectively profiting from online scams – and this should be stopped. This debate is likely to increase once the government introduces the Online Safety Bill later this year, as there is still some debate as to whether online fraud should be included in the bill.

Big tech and online platforms are widely considered to be among the ‘winners’ of the pandemic, benefitted from the changes in behaviours and the considerable increase in online commerce. But there is now a growing belief that the sector should take some responsibility for some of the social problems that are associated with it – and do more to address it.