As losses to online investment scams skyrocket during the pandemic, Australia’s financial services watchdog has called for a crackdown on investment scam ads run by Google and Facebook.
Australians lost an estimated $140 million to sophisticated, online investment scams last year, according to the Financial Services Council (FSC). The FSC has called for the introduction of a mandatory code of conduct to regulate online advertising via technology giants Facebook and Google, to better protect the public from financial scams
Soaring losses to financial scams is an “urgent wake-up call that action is required to protect consumers,” said FSC chief executive Blake Briggs, in response to the Australian Competition and Consumer Commission’s Digital Platform Services enquiry, examining the market power of the tech giants.
“Digital platforms must take action against scammers who purport to offer reputable investment options and target people through social media advertisements, paid search engine results and messenger applications,” Briggs said.
In March, the ACCC launched legal action against Facebook’s parent company Meta over a series of cryptocurrency scam ads.
The ACCC claimed that the ads promoted investment in crypto or money-making schemes which were actually scams. They gave the misleading impression of being associated with or endorsed by public figures including David Koch, Dick Smith, Andrew Forrest and Mike Baird.
The scams directed victims to a fake news story featuring quotes attributed to the public figure depicted in the Facebook ad. Victims were then invited to sign up to the scheme, with scammers using high pressure tactics to convince them to deposit money.
Reputable Australian investment funds have also had their brands cloned, with scammers purporting to offer financial products under their brands and targeting people via social media advertisements, paid search engine results and via messenger applications. Recent scams have impersonated financial services providers such as Vanguard, spruiking fraudulent bonds.
The FFC is calling for a mandatory industry code of conduct for tech giants like Google and Facebook, which only permits paid-for advertisements from financial services providers authorised by the Australian Securities and Investments Commission (ASIC). The FCC also wants to see a crackdown on investment scam ads, with a commitment from the tech giants to remove fraudulent content from their platforms.