Online Safety Bill (Eighth sitting)

Baroness Keeley Excerpts

Committee stage
Thursday 9th June 2022 Public Bill Committees

Duties about fraudulent advertising: Category 1 services

[Barbara Keeley (Worsley and Eccles South) (Lab)]

I beg to move amendment 23, in clause 34, page 33, line 41, after “service” insert “that targets users”.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 24, in clause 35, page 34, line 34, after “service” insert “that targets users”.

New clause 5—Duty to distinguish paid-for advertisements—

“(1) A provider of a Category 2A service must operate the service using systems and processes designed to clearly distinguish to users of that service paid-for advertisements from all other content appearing in or via search results of the service.

(2) The systems and processes described under subsection (1)—

(a) must include clearly displaying the words “paid-for advertisement” next to any paid-for advertisement appearing in or via search results of the service, and

(b) may include measures such as but not limited to the application of colour schemes to paid-for advertisements appearing in or via search results of the service.

(3) The reference to paid-for advertisements appearing “in or via search results of a search service” does not include a reference to any advertisements appearing as a result of any subsequent interaction by a user with an internet service other than the search service.

(4) If a person is the provider of more than one Category 2A service, the duties set out in this section apply in relation to each such service.

(5) The duties set out in this section extend to the design, operation and use of a Category 2A service that hosts paid-for advertisements targeted at users of that service in the United Kingdom.

(6) For the meaning of “Category 2A service”, see section 81 (register of a categories of service).

(7) For the meaning of “paid-for advertisement”, see section 189 (interpretation: general).”

New clause 6—Duty to verify advertisements—

“(1) A provider of a Category 2A service must operate an advertisement verification process for any relevant advertisement appearing in or via search results of the service.

(2) In this section, “relevant advertisement” means any advertisement for a service or product to be designated in regulations made by the Secretary of State.

(3) The verification process under subsection (1) must include a requirement for advertisers to demonstrate that they are authorised by a UK regulatory body.

(4) In this section, “UK regulatory body” means a UK regulator responsible for the regulation of a particular service or product to be designated in regulations made by the Secretary of State.

(5) If a person is the provider of more than one Category 2A service, the duties set out in this section apply in relation to each such service.

(6) For the meaning of “Category 2A service”, see section 81 (register of a categories of service).

(7) Regulations under this section shall be made by statutory instrument.

(8) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by resolution of each House of Parliament.”

[Barbara Keeley]

I begin by thanking my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) for her work on drafting these amendments and others relating to this chapter, which I will speak to shortly. She has campaigned excellently over many years in her role as chair of the all-party parliamentary group on ticket abuse. I attended the most recent meeting of that group back in April to discuss what we need to see changed in the Bill to protect people from scams online. I am grateful to those who have supported the group and the anti-ticket touting campaign for their insights.

It is welcome that, after much flip-flopping, the Government have finally conceded to Labour’s calls and those of many campaign groups to include a broad duty to tackle fraudulent advertising on search engines through chapter 5 of part 3 of the Bill. We know that existing laws to protect consumers in the online world have failed to keep pace with the actors attempting to exploit them, and that is particularly true of scams and fraudulent advertisements.

Statistics show a steep increase in this type of crime in the online world, although those figures are likely to be a significant underestimate and do not capture the devastating emotional impact that scams have on their victims. The scale of the problem is large and it is growing.

The Financial Conduct Authority estimates that fraud costs the UK up to £190 billion a year, with 86% of that fraud committed online. We know those figures are increasing. The FCA more than doubled the number of scam warnings it issued between 2019 and 2020, while UK Finance data shows that there has been a significant rise in cases across all scam types as criminals adapt to targeting victims online. The pandemic, which led to a boom in internet shopping, created an environment ripe for exploitation. Reported incidents of scams and fraud have increased by 41% since before the pandemic, with one in 10 of us now victims of fraud.

Being scammed can cause serious psychological harm. Research by the Money and Mental Health Policy Institute suggests that three in 10 online scam victims felt depressed as a result of being scammed, while four in 10 said they felt stressed. Clearly, action to tackle the profound harms that result from fraudulent advertising is long overdue.

This Bill is an important opportunity but, as with other issues the Government are seeking to address, we need to see changes if it is to be successful. Amendments 23 and 24 are small and very simple, but would have a profound impact on the ability of the Bill to prevent online fraud from taking place and to protect UK users.

As currently drafted, the duties set out in clauses 34 and 35 for category 1 and 2A services extend only to the design, operation and use of a category 1 or 2A service in the United Kingdom. Our amendments would mean that the duties extended to the design, operation and use of a category 1 or 2A service that targets users in the United Kingdom. That change would make the Bill far more effective, because it would reduce the risk of a company based overseas being able to target UK consumers without any action being taken against them—being allowed to target the public fraudulently without fear of disruption.

That would be an important change, because paid-for advertisements function by the advertiser stating where in the world, by geographical location, they wish to target consumers. For instance, a company would be able to operate from Hong Kong and take out paid-for advertisements to target consumers just in one particular part of north London. The current wording of the Bill does not acknowledge the fact that internet services can operate from anywhere in the world and use international boundaries to circumvent UK legislation.

Other legislation has been successful in tackling scams across borders. I draw the Committee’s attention to the London Olympic Games and Paralympic Games Act 2006, which made it a crime to sell a ticket to the Olympics into the black market anywhere in the world, rather than simply in the UK where the games took place. I suggest that we should learn from the action taken to regulate the Olympics back in 2012 and implement the same approach through amendments 23 and 24.

New clause 5 was also tabled by my hon. Friend the Member for Washington and Sunderland West, who will be getting a lot of mentions this afternoon.

[Alex Davies-Jones (Pontypridd) (Lab)]

Too right, too.

[Barbara Keeley]

New clause 5 would tackle one of the reasons people become subject to fraud online by introducing a duty for search engines to ensure that all paid-for search advertisements should be made to look distinct from non-paid-for search results. When bad actors are looking to scam consumers, they often take out paid-for advertising on search results, so that they can give consumers the false impression that their websites are official and trustworthy.

Paid search results occur when companies pay a charge to have their site appear at the top of search results. This is valuable to them because it is likely to direct consumers towards their site. The new clause would stop scam websites buying their way to the top of a search result.

Let me outline some of the consequences of not distinguishing between paid-for and not-paid-for advertisements, because they can be awful. Earlier this year, anti-abortion groups targeted women who were searching online for a suitable abortion clinic. The groups paid for the women to have misleading adverts at the top of their search that directed them towards an anti-abortion centre rather than a clinic. One woman who knew that she wanted to have an abortion went on researching where she could have the procedure. Her search for a clinic on Google led her to an anti-abortion centre that she went on to contact and visit. That was because she trusted the top search results on Google, which were paid for. The fact that it was an advertisement was indicated only by the two letters “AD” appearing in very small font underneath the search headline and description.

Another example was reported by The Times last year. Google had been taking advertising money from scam websites selling premier league football tickets, even though the matches were taking place behind closed doors during lockdown. Because these advertisements appeared at the top of search results, it is entirely understandable that people looking for football tickets were deceived into believing that they would be able to attend the games, which led to them being scammed.

There have been similar problems with passport renewals. As colleagues will be very aware, people have been desperately trying to renew their passports amid long delays because of the backlog of cases. This is a target for fraudsters, who take out paid advertisements to offer people assistance with accessing passport renewal services and then scam them.

New clause 5 would end this practice by ensuring that search engines provide clear messaging to show that the user is looking at a paid-for advertisement, by stating that clearly and through other measures, such as a separate colour scheme. A duty to distinguish paid-for advertising is present in many other areas of advertising. For example, when we watch TV, there is no confusion between what is a programme and what is an advert; the same is true of radio advertising; and when someone is reading a newspaper or magazine, the line between journalism and the advertisements that fund the paper is unmistakable.

We cannot continue to have these discrepancies and be content with the internet being a wild west. Therefore, it is clear that advertising on search engines needs to be brought into line with advertising in other areas, with a requirement on search engines to distinguish clearly between paid-for and organic results.

New clause 6 is another new clause tabled by my hon. Friend the Member for Washington and Sunderland West. It would protect consumers from bad actors trying to exploit them online by placing a duty on search engines to verify adverts before they accept them. That would mean that, before their adverts were allowed to appear in a paid-for search result, companies would have to demonstrate that they were authorised by a UK regulatory body designated by the Secretary of State.

This methodology for preventing fraud is already in process for financial crime. Google only accepts financial services advertisements from companies that are a member of the Financial Conduct Authority. This gives companies a further incentive to co-operate with regulators and it protects consumers by preventing companies that are well-known for their nefarious activities from dominating search results and then misleading consumers. By extending this best practice to all advertisements, search engines would no longer be able to promote content that is fake or fraudulent after being paid to do so.

Without amending the Bill in this way, we risk missing an opportunity to tackle the many forms of scamming that people experience online, one of which is the world of online ticketing. In my role as shadow Minister for the arts and civil society, I have worked on this issue and been informed by the expertise of my hon. Friend the Member for Washington and Sunderland West.

In the meeting of the all-party parliamentary group on ticket abuse in April, we heard about the awful consequences of secondary ticket reselling practices. Ticket reselling websites, such as Viagogo, are rife with fraud. Large-scale ticket touts dominate the resale site, and Viagogo has a well-documented history of breaching consumer protection laws. Those breaches include a number of counts of fraud for selling non-existent tickets. Nevertheless, Viagogo continues to take out paid-for advertisements with Google and is continually able to take advantage of consumers by dominating search results and commanding false trust.

If new clause 6 is passed, then secondary ticketing websites such as Viagogo would have to be members of a regulatory body responsible for secondary ticketing, such as the Society of Ticket Agents and Retailers, or STAR. Viagogo would then have to comply with STAR standards for its business model to be successful.

I have used ticket touting as an example, but the repercussions of this change would be wider than that. Websites that sell holidays and flights, such as Skyscanner, would have to be a member of the relevant regulatory group, for example the Association of British Travel Agents. People would be able to go to football matches, art galleries and music festivals without fearing that they are getting ripped off or have been issued with fake tickets.

I will describe just a few examples of the poor situation we are in at the moment, to illustrate the need for change. The most heartbreaking one is of an elderly couple who bought two tickets from a secondary ticketing website to see their favourite artist, the late Leonard Cohen, to celebrate their 70th wedding anniversary. When the day came around and they arrived at the venue, they were turned away and told they had been sold fake tickets. The disappointment they must have felt would have been very hard to bear. In another instance, a British soldier serving overseas decided to buy his daughter concert tickets because he could not be with her on her birthday. When his daughter went along to the show, she was turned away at the door and told she could not enter because the tickets had been bought through a scam site and were invalid.

--- Later in debate ---

[Chris Philp]

I thank the hon. Member for Aberdeen North for her latter remarks. We made an important addition to the Bill after listening to parliamentarians across the House and to the Joint Committee, which many people served on with distinction. I am delighted that we have been able to make that significant move. We have heard a lot about how fraudulent advertising can affect people terribly, particularly more vulnerable people, so that is an important addition.

Amendments 23 and 24 seek to make it clear that where the target is in the UK, people are covered. I am happy to assure the Committee that that is already covered, because the definitions at the beginning of the Bill—going back to clause 3(5)(b), on page 3—make it clear that companies are in scope, both user-to-user and search, if there is a significant number of UK users or where UK users form one of the target markets, or is the only target market. Given the reference to “target markets” in the definitions, I hope that the shadow Minister will withdraw the amendment, because the matter is already covered in the Bill.

New clause 5 raises important points about the regulation of online advertising, but that is outside the purview of what the Bill is trying to achieve. The Government are going to work through the online advertising programme to tackle these sorts of issues, which are important. The shadow Minister is right to raise them, but they will be tackled holistically by the online advertising programme, and of course there are already codes of practice that apply and are overseen by the Advertising Standards Authority. Although these matters are very important and I agree with the points that she makes, there are other places where those are best addressed.

New clause 6 is about the verification process. Given that the Bill is primary legislation, we want to have the core duty to prevent fraudulent advertising in the Bill. How that is implemented in this area, as in many others, is best left to Ofcom and its codes of practice. When Ofcom publishes the codes of practice, it might consider such a duty, but we would rather leave Ofcom, as the expert regulator, with the flexibility to implement that via the codes of practice and leave the hard-edged duty in the Bill as drafted.

[Barbara Keeley]

We are going to press amendments 23 and 24 to a vote because they are very important. I cited the example of earlier legislation that considered it important, in relation to selling tickets, to include the wording “anywhere in the world”. We know that ticket abuses happen with organisations in different parts of the world.

[Chris Philp]

The hon. Lady is perfectly entitled to press to a vote whatever amendments she sees fit, but in relation to amendments 24 and 25, the words she asks for,

“where the UK is a target market”,

are already in the Bill, in clause 3(5)(b), on page 3, which set out the definitions at the start. I will allow the hon. Lady a moment to look at where it states:

“United Kingdom users form one of the target markets for the service”.

That applies to user-to-user and to search, so it is covered already.

[Barbara Keeley]

The problem is that we are getting into the wording of the Bill. As with the child abuse clause that we discussed before lunch, there are limitations. Clause 3 states that a service has links with the United Kingdom if

“the service has a significant number of United Kingdom users”.

It does not matter if a person is one of 50, 100 or 1,000 people who get scammed by some organisation operating in another part of the country. The 2006 Bill dealing with the sale of Olympic tickets believed that was important, and we also believe it is important. We have to find a way of dealing with ticket touting and ticket abuse.

Turning to fraudulent advertising, I have given examples and been supported very well by the hon. Member for Aberdeen North. It is not right that vulnerable people are repeatedly taken in by search results, which is the case right now. The reason we have tabled all these amendments is that we are trying to protect vulnerable people, as with every other part of the Bill.

[Chris Philp]

That is of course our objective as well, but let me just return to the question of the definitions. The hon. Lady is right that clause 3(5)(a) says

“a significant number of United Kingdom users”,

but paragraph (b) just says,

“United Kingdom users form one of the target markets”.

There is no significant number qualification in paragraph (b), and to put it beyond doubt, clause 166(1) makes it clear that service providers based outside the United Kingdom are within the scope of the Bill. To reiterate the point, where the UK is a target market, there is no size qualification: the service provider is in scope, even if it is only one user.

[Barbara Keeley]

Does the Minister want to say anything about the other points I made about advertisements?

[Chris Philp]

Not beyond the points I made previously, no.

Question put, That the amendment be made.

--- Later in debate ---

[The Chair]

With this it will be convenient to discuss the following:

Amendment 45, in clause 35, page 34, line 2, leave out subsection (1) and insert—

“(1) A provider of a Category 2A service must operate the service using proportionate systems and processes designed to—

(a) prevent individuals from encountering content consisting of fraudulent advertisements by means of the service;

(b) minimise the length of time for which any such content is present;

(c) where the provider is alerted by a person to the presence of such content, or becomes aware of it in any other way, swiftly take down such content.”

This amendment brings the fraudulent advertising provisions for Category 2A services in line with those for Category 1 services.

Government amendments 91 to 94.

Clause 35 stand part.

Amendment 44, in clause 36, page 35, line 10, at end insert—

“(4A) An offence under Part 3 of the Consumer Protection from Unfair Trading Regulations 2008.”

This amendment adds further offences to those which apply for the purposes of the Bill’s fraudulent advertising provisions.

Clause 36 stand part.

[Barbara Keeley]

I am aware that the Minister has reconsidered the clause and tabled a Government amendment that is also in this group, with the same purpose as our amendment 45. That is welcome, as there was previously no justifiable reason why the duties on category 1 services and category 2A services were misaligned.

All three of the duties on category 1 services introduced by clause 34 are necessary to address the harm caused by fraudulent and misleading online adverts. Service providers need to take proportionate but effective action to prevent those adverts from appearing or reappearing, and when they do appear, those service providers need to act quickly by swiftly taking them down. The duties on category 2A services were much weaker, only requiring them to minimise the risk of individuals encountering content consisting of fraudulent advertisements in or via search results of the service. There was no explicit reference to prevention, even though that is vital, or any explicit requirement to act quickly to take harmful adverts down.

That difference would have created an opportunity for fraudsters to exploit by focusing on platforms with lesser protections. It could have resulted in an increase in fraud enabled by paid-for advertising on search services, which would have undermined the aims of the Bill. I am glad that the Government have recognised this and will require the same proactive, preventative response to harmful ads from regulated search engines as is required from category 1 services.

--- Later in debate ---

[Chris Philp]

As we have heard already, these clauses are very important because they protect people from online fraudulent advertisements for the first time—something that the whole House quite rightly called for. As the shadow Minister said, the Government heard Parliament’s views on Second Reading, and the fact that the duties in clause 35 were not as strongly worded as those in clause 34 was recognised. The Government heard what Members said on Second Reading and tabled Government amendments 91 to 94, which make the duties on search firms in clause 35 as strong as those on user-to-user firms in clause 34. Opposition amendment 45 would essentially do the same thing, so I hope we can adopt Government amendments 91 to 94 without needing to move amendment 45. It would do exactly the same thing—we are in happy agreement on that point.

I listened carefully to what the shadow Minister said on amendment 44. The example she gave at the end of her speech—the poor lady who was induced into sending money, which she thought was being sent to pay off creditors but was, in fact, stolen—would, of course, be covered by the Bill as drafted, because it would count as an act of fraud.

The hon. Lady also talked about some other areas that were not fraud, such as unfair practices, misleading statements or statements that were confusing, which are clearly different from fraud. The purpose of clause 35 is to tackle fraud. Those other matters are, as she says, covered by the Consumer Protection from Unfair Trading Regulations 2008, which are overseen and administered by the Competition and Markets Authority. While matters to do with unfair, misleading or confusing content are serious—I do not seek to minimise their importance—they are overseen by a different regulator and, therefore, better handled by the CMA under its existing regulations.

If we introduce this extra offence to the list in clause 36, we would end up having a bit of regulatory overlap and confusion, because there would be two regulators involved. For that reason, and because those other matters—unfair, misleading and confusing advertisements —are different to fraud, I ask that the Opposition withdraw amendment 44 and, perhaps, take it up on another occasion when the CMA’s activities are in the scope of the debate.

[Barbara Keeley]

No, we want to press this amendment to a vote. I have had further comment from the organisations that I quoted. They believe that we do need the amendment because it is important to stop harmful ads going up in the first place. They believe that strengthened provisions are needed for that. Guidance just puts the onus for protecting consumers on the other regulatory regimes that the Minister talked about. The view of organisations such as StepChange is that those regimes—the Advertising Standards Authority regime—are not particularly strong.

The regulatory framework for financial compulsion is fragmented. FCA-regulated firms are clearly under much stronger obligations than those that fall outside FCA regulations. I believe that it would be better to accept the amendment, which would oblige search engines and social media giants to prevent harmful and deceptive ads from appearing in the first place. The Minister really needs to take on board the fact that in this patchwork, this fragmented world of different regulatory systems, some of the existing systems are clearly failing badly, and the strong view of expert organisations is that the amendment is necessary.

Question put and agreed to.

Clause 34 accordingly ordered to stand part of the Bill.

Clause 35

Duties about fraudulent advertising: Category 2A services

Amendments made: 91, in clause 35, page 34, line 3, leave out from “to” to end of line 5 and insert—

“(a) prevent individuals from encountering content consisting of fraudulent advertisements in or via search results of the service;

(b) if any such content may be encountered in or via search results of the service, minimise the length of time that that is the case;

(c) where the provider is alerted by a person to the fact that such content may be so encountered, or becomes aware of that fact in any other way, swiftly ensure that individuals are no longer able to encounter such content in or via search results of the service.”

This amendment alters the duty imposed on providers of Category 2A services relating to content consisting of fraudulent advertisements so that it is in line with the corresponding duty imposed on providers of Category 1 services by clause 34(1).

Amendment 92, in clause 35, page 34, line 16, leave out “reference” and insert “references”.

This amendment is consequential on Amendment 91.

Amendment 93, in clause 35, page 34, line 18, leave out “is a reference” and insert “are references”.

This amendment is consequential on Amendment 91.

Amendment 94, in clause 35, page 34, line 22, leave out

“does not include a reference”

and insert “do not include references”.—(Chris Philp.)

This amendment is consequential on Amendment 91.

Clause 35, as amended, ordered to stand part of the Bill.

Clause 36

Fraud etc offences

Amendment proposed: 44, in clause 36, page 35, line 10, at end insert—

“(4A) An offence under Part 3 of the Consumer Protection from Unfair Trading Regulations 2008.”—(Barbara Keeley.)

This amendment adds further offences to those which apply for the purposes of the Bill’s fraudulent advertising provisions.

Question put, That the amendment be made.