Online Safety Bill

Baroness Morgan of Cotes Excerpts

Committee stage
Thursday 11th May 2023 Lords Chamber

Moved by

[Baroness Morgan of Cotes]

53: Clause 16, page 18, line 10, at end insert—
“(3A) Content that constitutes a fraudulent advertisement within the meaning of section 33.”Member’s explanatory statement
This amendment, and others in the name of Baroness Morgan, would extend the current provisions on transparency reporting, user reporting and user complaints to fraudulent advertisements.

[Baroness Morgan of Cotes (Con)]

My Lords, I shall speak to Amendments 53 to 55, and Amendments 86, 87, 162 to 173, and 175 to 181 in my name and that of the noble Lord, Lord Clement-Jones. I declare my relevant interests in this group of amendments as a non-executive director of the Financial Services Compensation Scheme and Santander UK, and chair of the Association of British Insurers—although, as we have heard, fraud is prevalent across all sectors, so we are all interested in these issues.

This debate follows on well from that on the last group of amendments, as we were just hearing. Fraud is now being discussed so widely in this House and in Parliament that there are three Bills before your Lordships’ House at the moment in which fraud is a very real issue. I am sure that there are others, but there are three major Bills—this one, the Economic Crime and Corporate Transparency Bill, and the Financial Services and Markets Bill.

These amendments seek to fill a noticeable gap in the Bill concerning fraudulent advertisements—a gap that can be easily remedied. The Minister has done a very good job so far with all groups that we have debated, batting away amendments, but I hope that he might just say, “Yes, I see the point of the amendment that you are putting forward, and I shall go away and think about it”. I will see what attitude and response we get at the end of the debate.

I had the great privilege, as I said yesterday when asking a question, of chairing this House’s 2022 inquiry into the Fraud Act 2006 and digital fraud. As we have heard, fraud is currently the fastest growing crime and is being facilitated by online platforms. Coincidentally, just today, UK Finance, the trade body for the UK banking industry, has published its fraud figures for 2022. It has conducted analysis on more than 59,000 authorised push payment fraud cases to show the sources of fraud. Authorised push payment is where the customer—the victim, unfortunately—transfers money to the fraudster and authorises that transfer but has often, or usually, been socially engineered into doing so. UK Finance is now asking where those frauds originate from, and its analysis shows that 78% of APP fraud cases originated online and accounted for 36% of losses, and 18% of fraud cases originated via telecommunications and accounted for 44% of losses.

I will leave to one side the fact that the Bill does not touch on emails and telecoms, and I shall focus today on fraudulent advertisements and fraud. I should say that I welcome the fact the Government changed the legislation from the draft Bill when the Bill was presented to the House of Commons so that fraudulent advertisements and fraud were caught more in the Bill than had originally been anticipated.

As we have heard, victims of fraud suffer not just financially but emotionally and mentally, with bouts of anxiety and depression. They report feeling “embarrassed or depressed” about being scammed. Many lose a significant amount of money in a way that severely impacts their lives and, in the worst cases, people have been known to take their own lives. In case of things such as romance scams or investment scams, people’s trust is severely undermined in any communication that they subsequently receive. I thank all of those victims of fraud who gave evidence to our inquiry and have done so to other inquiries in this House and in the House of Commons.

Fraud is a pretty broad term, as we set out in the report, and we should be clear that this Bill covers fraud facilitated by user-generated content or via search results and fraudulent advertisements on the largest social media and search services. My noble friend the Minister spoke about the meeting held earlier this week between Members of this House and Ministers, and officials produced a helpful briefing note that makes it clear that the Bill covers such fraud. However, as I said, emails, SMS and MMS messages, and internet service providers—web hosting services—are not covered by the Bill. There remains very much a gap that victims, sadly, can fall through.

The point of the amendments in the group, and the reason I hope that the Minister can at least say yes to some of them, is that they are pushing in the direction that the Government want to go too. At the moment, the Bill appears to exclude fraudulent advertisements from several key duties that apply to other priority illegal content, thereby leaving consumers with less protection. In particular, the duties or lack of them around transparency reporting, user reporting and complaints in relation to fraudulent advertisements is concerning. It does not make any sense. That is why I hope that the Minister can explain the drafting. It could be argued that fraudulent advertising is already included in transparency reporting as defined in the Bill, but that is limited to a description of platforms’ actions and does not include obligations to provide information on the incidence of fraudulent advertisements or other key details, as is required for other types of illegal content.

Transparency reporting, as I suspect we will hear from a number of noble Lords, is essential for the regulator to see how prevalent fraudulent advertisements are on a platform’s service and whether that platform is successfully mitigating the advertisements. It remains essential, too, that users can easily report fraudulent content when they come across it and for there to be a procedure that allows users to complain if platforms are failing in their duty to keep users safe.

I should point my noble friend to the Government’s fraud strategy published last week. Paragraph 86 states:

“We want to make it as simple as possible for users to report fraud they see online. This includes scam adverts, false celebrity endorsements and fake user profiles. In discussion with government, many of the largest tech companies have committed to making this process as seamless and consistent as possible. This means, regardless of what social media platform or internet site you are on, you should be able to find the ‘report’ button within a single click, and then able to select ‘report fraud or scams’.”


The Government are saying that they want user reporting to be as simple as possible. These amendments suggest ways in which we can make user reporting as simple as possible as regards fraudulent advertisers.

The amendments address the gap in the Bill’s current drafting by inserting fraudulent advertising alongside other illegal content duties for social media reporting in Clause 16, complaints in Clause 17 and the equivalent clauses for search engines in Clauses 26 and 27. The amendments add fraudulent advertising alongside other illegal content into the description of the transparency reporting requirements in Schedule 8. Without these amendments, the regulator will struggle to understand the extent of the problem of fraudulent advertisements and platforms will probably fail to prevent this harmful content being posted.

This will, I hope, be a short debate, and I look forward to hearing what my noble friend the Minister has to say on this point. I beg to move.

--- Later in debate ---

[Lord Lucas (Con)]

My Lords, I am grateful to my noble friend for replying to my amendments and for his offer of a meeting, which I will certainly accept when issued.

The Government are missing some opportunities here. I do not know whether he has tried reporting something to Action Fraud, but if you have not lost money you cannot do it; you need to have been gulled and lost money for any of the government systems to take you seriously. While you can report something to the other ones, they do not tell you what they have done. There is no feedback or mechanism for encouraging and rewarding you for reporting—it is a deficient system.

When it comes to job adverts, by and large they go through job boards. There is a collection of people out there who are not direct internet providers who have leverage, and a flow of data to them can make a huge difference; there may also be other areas. It is that flow of data that enables job scams to be piled down on, and that is what the Bill needs to improve. Although the industry as a whole is willing, there just is not the impetus at the moment to make prevention nearly as good as it should be.

[Baroness Morgan of Cotes (Con)]

My Lords, I thank my noble friend the Minister very much indeed for his response. Although this has been a short debate, it is a good example of us all just trying to get the Bill to work as well as possible—in this case to protect consumers, but there will be other examples as well.

My noble friend said that the larger services in particular are the ones that are going to have to deal with fraudulent advertisements, so I think the issue about the burdens of user reporting do not apply. I remind him of the paragraph I read out from the Fraud Strategy, where the Government themselves say that they want to make the reporting of fraud online as easy as possible. I will read the record of what he said very carefully, but it might be helpful after that to have a further conversation or perhaps for him to write to reassure those outside this Committee who are looking for confirmation about how transparency reporting, user reporting and complaints will actually apply in relation to fraudulent advertisements, so that this can work as well as possible.

On that basis, I will withdraw my amendment for today, but I think we would all be grateful for further discussion and clarification so that this part of the Bill works as well as possible to protect people from any kind of fraudulent advertisement.

Amendment 53 withdrawn.