Law changes following Brexit enable the FCA to hold Google to account for accepting Scammers online Advertisements

The ever-present scourge of investment fraud currently perpetrated through online platforms presents a growing problem for law enforcement and regulators alike. One significant benefit that Brexit has brought to this situation is that the Financial Conduct Authority (FCA) can now take action against online platforms, whereas previously the EU rules on advertising financial products did not encompass Google and similar platforms. A loophole that was and is ruthlessly exploited by scammers to buy advertising space to pitch their financial frauds without any extra checks required.

Joanna Bailey, an associate in Giambrone’s highly regarded banking and financial litigation team observed “the FCA’s stated aim in its Consumer Investments Data Review 2020 is to hold Google to account for profiting from fraud by accepting advertising revenue from scammers online advertising of financial scams as genuine investment opportunities.” Joanna further remarked “regulators and law enforcement agencies constantly highlight the fact that scammers are using online platforms to deceive investors and frequently issue warnings against the “too good to be true” investment schemes. The pandemic has been a gift to online scammers with the FCA issuing 600 warnings about scam firms”

Giambrone’s banking and financial litigation team have developed a range of novel tactics to assist in bringing scammers to account and help restore their victims’ lost funds. Our lawyers welcome a “prevention” strategy by the regulators but also would equally welcome a focus on the prevention of hiding illegal assets in unaccountable off-shore vehicles, which make retrieving our clients’ funds a very slow process.

Joanna commented “the vast majority of scammers are sophisticated and well-practised in financial fraud. Generally, they have laid the ground for a swift untraceable exit before they start. This makes tracking and tracing them a lengthy painstaking exercise, which is extremely frustrating for our clients, many of whom are considerably out of pocket and urgently need the restoration of their funds. However, the team’s extensive experience in dealing with financial fraud enables us to meticulously follow the tracks and navigate the legal route to regaining the money extracted from our clients by fraud.”

The scale of the task before the FCA tackle consumer harm in the investment market is daunting. FCA appears to be aiming towards making online platforms bear responsibility for policing the adverts they accept, so if any advertisement offering a financial promotion appeared on Google, this would trigger a duty in Google to make sure it had been approved by an appropriate authority or met the requirements of one of the exemptions. This would, of course, significantly extend the existing responsibility and duties that Google is obliged to undertake. 

Mark Steward, the head of enforcement at the FCA appeared before a Treasury select committee and pointed out that the global techno giants had been made aware of the difference in the FCA’s role and capacity since Brexit. He stated “We now have quite a lot of traction with the social media industry to force change. Companies such as Google make millions of pounds every year from fraudsters who pay for adverts.” Mr. Steward further commented “the FCA will act against Google if it continues to accept advertisements for online financial scams. If they can’t comply, we’re going to have to do something about it in a more formal way.” 

Whilst Joanna and her team are pleased that the FCA has some more teeth to tackle the problem of online scammers, the hope is that there could be a similar focus on retrieving illicit proceeds of their fraudulent schemes to enable the victims’ money to be restored without having such a long wait.

If you believe you have been the victim of an investment fraud please click here for information on how Giambrone can help you.