It’s fast becoming an epidemic, says campaigner Mark Taber, who has flagged 126 adverts for investment scams with both Google and the UK’s Financial Conduct Authority (FCA) over the past six weeks alone. Solving the issue might require intervention from the British government, as an exemption in UK law keeps Google at arm’s length of the country’s lead financial watchdog.
— Mark Taber (@MarkTaber_FII) February 16, 2020 Neither party have been effective in curbing the fraudulent activity. Google is a platform, not a publisher, so it says it’s not liable for the content of the adverts displayed to users. The problem is so bad that Taber has urged the public to avoid looking for investments on Google, as they run the risk of falling victim to fraud.
Google’s advert landscape is a playground for investment scams
As noted by The Independent, Google’s advertisement platform allows anyone to open an account and submit bids to place their adverts at the top of search results for certain keywords. [READ: Here’s how much money you made Google by staring at its ads for 20 years] Newbies looking for basic investments like bonds and Individual Savings Accounts (bank accounts used for storing assets like stocks) make lucrative targets for fraudsters, who simply pay Google to have their “products” appear before legitimate operations, increasing their exposure and boosting credibility. In fact, the FCA reportedly paid more than $770,000 over four months to have its own adverts appear above fraudulent investment firms in Google search results. When Google does remove sites, they reportedly re-appear almost instantly under slightly different domains. Some list no identifying details other than an online form — despite Google’s rules that demand advertisers submit a physical contact address. The FCA also maintains a list of scams to assist the public in avoiding them altogether, but the number of fraudulent firms advertising on Google reportedly far exceeds what’s on the list.
Pre-vetting firms before publishing adverts is the only way
Taber maintains that pre-vetting accounts is the only effective and efficient way to stop the investment fraud advert epidemic. Traditional media such as print and broadcast already do this, as they’re jointly liable for the advertisements they publish under UK law. However, the UK’s financial regulators says its hands are tied. The Big G’s European headquarters are in Ireland — outside of the FCA’s jurisdiction — which means it holds no power over the internet giant in this case. “The FCA believes it cannot take formal action against Google as publisher of scam financial promotions because of an exemption in the Financial Promotions Order for non-UK online platforms within the EEA [European Economic Area],” Taber told Hard Fork. Google Ads is based in Dublin, making it a non-UK entity (Google is a US company) that operates within the EEA, added Taber. Ultimately, it requires Her Majesty’s Treasury (the UK’s finance ministry) to remove the exemption from the Financial Promotions Order so that Google and other online platforms (like Facebook) are forced to pre-vet advertisers on their platforms to ensure they’re authorized by the FCA, said Taber. It’s unclear whether this is likely to happen any time soon. In the meantime, Google says “it’s working with the FCA and other independent experts on a scalable and long-term solution to ensure that consumers are protected.” Hard Fork has reached out to Google to learn more about how it plans to manage the prevalence investment scams ads and will update this piece should we hear back. Until that happens, both the criminals and online platforms continue to rake in cash. Estimates suggest Google earns tens of millions of dollars every year by accepting adverts from unregulated and fraudulent investment schemes. Last month, The Telegraph reported one UK firm peddling unregulated “mini-bonds” paid Google more than $25 million to boost its adverts to attract more customers, while in the UK, more than $60 million was lost to investment fraud in 2018.
