Google to limit UK financial ads to FCA-approved companies to crack down on scam

Google to tighten its ad screening rules and policies for financial services advertisers targeting searchers and consumers in the UK in a bid to fight financial fraud.

The search giant announced that starting in the fall it will only run ads for financial products and services from sources that have been cleared by the UK’s financial watchdog.

Google said it will update its policy from August 30th and begin enforcing the rules a week later on September 6th. At that point, advertisers will have to demonstrate that they are authorised by the UK Financial Conduct Authority (FCA) or qualify for its limited exemptions. The requirement covers financial products and services that go beyond the regulator’s ambit.

The requirement covers financial services providers even if their products are not regulated by the FCA. Crypto service providers have until March 31 next year to register with the FCA.

Google has been receiving much criticism from regulators, law enforcement and consumer groups over its perceived lack of action against scam ads. According to trade body UK Finance, investment scam cases on search engines saw a 32% increase last year. These typically involve criminals duping victims into moving their money to a fictitious fund or to pay for a fake investment. Losses incurred from the fake ads totalled over £135m.

The FCA threatened to take legal action against Google and social media companies after it issued 1,200 warnings about fraudulent ads on their platforms, double the amount from 2019. The regulator told a parliamentary committee that it was able to start taking action in the wake of Brexit. In the past, the FCA had been bound by EU rules on financial ads that did not apply to online platforms.

Others blamed Google’s system for the failings. UK consumer group Which? found that 51% of the 1,870 search engine users it surveyed didn’t know how to report suspicious ads in search listings. This led some lawmakers to claim that it was content to continue profiting from the bogus ads. MPs told The Guardian that the company was benefiting from online scammers who paid to host ads on its platforms. While the FCA had also paid Google more than £600,000 ($830,000) in 2020 and 2021 to run anti-scam ads.

For its part, Google claims it has improved its ad screening rules using machine learning and human review. The tech giant removed 3.1 billion adverts that violated its policies in 2020 according to its ad transparency report. It also began verifying advertisers in January by requiring them to submit legal identification, business incorporation documents and proof of the country in which they operate.

Google has also “pledged $5m in advertising credits to support public awareness campaigns” which will be offered to “cross-industry organisations already campaigning on this issue, as well as government bodies undertaking awareness campaigns.”

Commenting on the FCA’s move against scam ads, Google UK and Ireland VP Ronan Harris said, “This new update builds on significant work in partnership with the FCA over the last 18 months to help tackle this issue. Today’s announcement reflects significant progress in delivering a safer experience for users, publishers and advertisers. While we understand that this policy update will impact a range of advertisers in the financial services space, our utmost priority is to keep users safe on our platforms — particularly in an area so disproportionately targeted by fraudsters.”

The FCA, meanwhile, welcomed “all steps which protect consumers from scams” and recognises that this is a “positive move from Google.” However, it will “review the detail” and the regulator didn’t rule out plans to impose stricter legislation to stamp out online financial fraud. It has warned that Google’s actions may not be enough to halt the introduction of tough new legislation to prevent fraud as part of the forthcoming Online Safety Bill.

“While this is an important step from Google we think a permanent and consistent solution requires legislation,” a spokesperson for the FCA said. “We also continue to consider that investment fraud caused by online advertising should be included in the scope of the Online Safety Bill, and welcome the Treasury Committee’s recent statement on this.”

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