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Law changes needed to tackle ‘sophisticated’ online scams

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10/02/2021
The government needs to adapt its forthcoming Online Safety Bill to bring in extra protection for consumers against online fraudsters.

That’s the conclusion of the Personal Investment Management & Financial Advice Association (PIMFA), which warned that attempts to defraud savers through online scams grew in January.

The trade body cautioned that the scams are becoming increasingly sophisticated and come in all sorts of different forms, from cloned websites and fake celebrity endorsements to impersonation scams and new courier fraud.

The trade body pointed to data from Action Fraud which found that there were the best part of 360,000 reported cases of fraud last year, with losses coming to around £2.1 billion. Of that total, investment and pension frauds accounted for less than 10% of all reported crimes, and yet a quarter of all financial losses.

In addition, cloned website fraud is a big concern, with £78 million lost to these scams where fraudsters copy an investment firm’s website in a bid to dupe people into handing over their cash. PIMFA suggested that the actual number of victims ‒ and the money lost ‒ to these frauds is likely “far, far higher than currently being reported”.

Recent reports have highlighted a series of online adverts ‒ presented as legitimate national newspaper articles ‒ which appear to enforce particular unregulated investment products. These have included fake tweets supposedly sent by Martin Lewis, founder of MoneySavingExpert.

Other scams reported to PIMFA in the last month included scammers talking savers into investing in unregulated schemes or products, which often involve virtual cryptocurrencies, with businesses which are listed on the FCA’s scam warning page. There have also been dozens of fake comparison sites, detailing unregulated bonds ‒ which don’t really exist ‒ in a bid to collect data from victims.

An ever-present danger

Liz Field, chief executive of PIMFA, cautioned that the impact of fraud on a victim’s financial and mental wellbeing can be devastating, but it is becoming an “ever-present danger in our daily lives”. She added that if the industry, government and regulators fails to come together and act now, online fraud will only get worse.

Field continued: “Most online scams could be prevented with the cooperation of Domain Name Registration Services, Internet Service Providers and online platforms such as social media and search engines,  but we need a legal framework and genuine enforcement procedures if we are to stop online fraud becoming pervasive. To do that we must include financial harms within the Online Safety Bill.”

The legislation has previously been criticised as being “embarrassing” due to the fact scams are not included, while it has also come under fire for failing to cover online sales of electrical items.

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