Instagram, TikTok, X and Youtube will have to take action against fraudulent ads on their platforms says UK watchdog.
Big tech companies could face an £18m fine for not taking action against scam ads under new proposals put forward by the UK’s broadcast regulator.
Ofcom has published draft measures urging platforms like YouTube, Instagram, X and TikTok to take action against fraudulent paid-for scam ads targeting users.
The draft proposal sets out 40 new practical measures on how major social media and search platforms should protect their users from falling victim to scammers.
Among the measures include: banning bad actors who post scam ads and preventing perpetrators from creating new accounts; foiling financial fraudsters by ensuring anyone posting an ad for banking or investment services is legally allowed to do so by the Financial Conduct Authority; and stepping up security safeguards to reduce the risk of accounts being hijacked.
In a separate set of draft rule, under the Online Safety Act (OSA), Ofcom is proposing social media firms – such as Meta, Snap and TikTok – should be held more accountable and give adult users greater control over their experience online.
For these services, the new requirements also include protecting news, journalism and content of democratic importance.
If the proposals are approved by parliament, companies could face a fine of up to £18m or 10% of their global turnover, whichever is higher, for non-compliance.
Ofcom’s work is part of a wider effort to tackle fraud, the UK’s most commonly experienced crime. Fraud may start online before moving elsewhere, and we are working closely with partners like law enforcement, business, and organisations that represent consumers [5].
Oliver Griffiths, online safety director, Ofcom, said: “For too long, victims have been exposed to scam ads online with tech giants simply not doing enough to combat the fraudsters using their platforms.
“We expect firms to take robust action to stamp out scam ads and boot out the bad actors behind them to safeguard their users.”
Ofcom’s draft fraudulent advertising code means tech giants including Meta, Google as well as OpenAI, will for the first time be legally required to put robust measures in place to address scam advertising, when it comes into force.
The move comes as more than £200m is lost by victims on average each year to scam ads in the UK, according to Ofcom’s own research. Half of adults (51%) have potentially come across fraudulent ads online and over third (36%) see them frequently.
More than £40bn is spent on digital advertising each year in the UK and is a significant proportion of big tech firms’ revenue.
Meta allegedly earnt billions of dollars from scam ads, including for illegal online casinos, according to an investigation by Reuters.
The social media giant penalises ads categorised as ‘high risk’ by collecting more ad revenue from them, so there is a large financial incentive for Meta to continue platforming these fraudulent ads at the risk of its users.
Consumer rights group Which? has welcomed the proposals, and has argued that tech platforms use scam ads as a “profitable income stream”.
