In light of significant financial and emotional harms, Ofcom is backing forthcoming online safety laws to spur tech firms to reduce consumer fraud
Exposing the scale of the problem in the UK: Research commissioned by Ofcom has shed light on the prevalence of online scams in the UK, with almost nine in 10 adults stating that they have come across content they suspected to be fraudulent. A quarter of those that have encountered online scams have lost money as a result, which can often have immediate negative impacts on a victim’s mental health. Ofcom’s study aims to build on its experience and understanding of tackling telecoms scams, and to help inform its preparations for implementing new online safety laws. According to the research, potential victims were most commonly contacted via a direct message or a mass message posted to a group (46%). Interestingly, 4% were targeted through social media posts or videos by ‘influencers’ – a market the French Government is looking to regulate more strictly.
The role of tech firms in tackling online fraud: 17% of those who experienced a potential scam online took no action at all, with many of this group considering that reporting the incident would not achieve anything. More than six in 10 participants to the study believe that tech firms have a responsibility for tackling online fraud, while over half considered that an alert from the platform, warning that the content or messages had come from an unverified user, would be useful in helping to stop people falling victim to scammers. Under the Online Safety Bill, certain tech companies will be required to mitigate the risks of harm to users from ‘priority illegal content’, including some types of fraudulent material, and of their platforms being used to commit or facilitate scams. Larger online services will also have to use systems and processes to prevent individuals from encountering fraudulent adverts, and take them down when they become aware of them.
Nearly 4% of global GDP is lost to scams each year: Ofcom will have new powers to ensure platforms adhere to their online safety obligations, and will develop Guidance and Codes of Practice to assist in that compliance. Given the significant impacts of scams, the regulator has already developed consumer protection advice, recommending that users don’t give out personal information or trust unknown attachments or links, and only use protected payment methods. The scale of the problem was laid bare at MWC23, with claims that 3.6% of global GDP is lost to fraud each year and that businesses are now spending up to 10% of their revenues on measures to combat it. At BT’s Data & AI driven fraud protection event on 13 March 2023, Marc Allera (CEO, BT Consumer) highlighted how technology, information sharing and cross-sector collaboration will all be vital to reducing network financial fraud.
