MPs are urging for tech giants like Google to be held accountable for hosting pension scam adverts on their platforms.
The Work and Pensions Committee has said that a lack of regulation has allowed for scammers to advertise fraudulent services online while tech giants profit, and is calling for legislation to tackle the issue.
‘Powerless to hold online firms accountable’
The Work and Pensions Committee published a report called “Protecting pension savers - five years on from the pension freedoms: Pension scams” which calls for the Government to “act quickly and decisively” to protect pension savers, five years on from the introduction of the pension freedoms, which has put people at risk of a wider range of scams.
The report states: “The move online by pension scammers has been a recurring theme of our inquiry. Regulators appear powerless to hold online firms to account for hosting scam advertisements in the same way they would be able to for traditional media.
“Scammers using paid online advertisements appear to be particularly hard to tackle without the cooperation of the hosting firm. It is immoral that tech firms such as Google are accepting payment to advertise scams, and then further payment from regulators to warn about the scam.
“It should not require legislative solutions to deter global firms from benefiting from the proceeds of crime, but unfortunately legislation is needed.”
The report goes on to recommend that, “in order to create parity between traditional media, such as TV and newspapers, and new media, including search engines and social networks”, paid for advertising on online platforms should be covered by “regulatory framework for financial promotions”.
The report adds that the forthcoming Online Safety Bill should legislate against online investment fraud.
‘Online free for all’
Work and Pensions Committee chair Stephen Timms said: “The pension freedoms brought more choice for savers on how to use their pension pots, but the reforms have also opened up a whole new work of opportunity for scammers and fraudsters.
“At the same time, a woeful lack of online regulation has helped them reach more people than ever before.
“The result is an online free for all, where scammers can advertise with impunity while the tech giants line their pockets from the proceeds of their crimes.
“With global firms such as Google being increasingly influential as providers of information, consumers looking for financial advice are being let down by not being afforded the same level of protection they receive from adverts which appear on television or in a newspaper.
“There must now be parity across the media to ensure all adverts are regulated and the Government should use its Online Safety Bill to act.”
‘Anyone can fall prey to a scammer’
Timms continued: “Tighter online regulation must be just the first step in improving protections for savers. Stronger enforcement with a new Pensions Scams Centre, a more effective FCA and extra support for victims are also desperately needed.
“Pension scams can cause huge financial harm and psychological distress and any one of us saving for the future is at risk of falling prey to a scammer.
“The Government and the regulators have been left playing catch up following the pension freedom reforms and must now act quickly to protect savers and their hard earned money.”
‘Protecting consumers is a priority’
A Google spokesperson said: “Protecting consumers and credible businesses operating in the financial sector is a priority for us.
“We take dishonest business practices and misleading ads very seriously and consider them to be a violation of our policies.
“Last year, we updated our financial services policies and removed 3.1 billion bad ads from our platforms, of which 123 million were ads related to financial services.
“When ads do not comply with our policies; we take action to remove them.”
‘Concerns about online scams and fraud’
A government spokesperson said: “We recognise the concerns about online scams and fraud, and we continue to work closely with industry, regulators and law enforcement partners to pursue fraudsters, close down the vulnerabilities they exploit and make sure people have the information they need to spot and report scams.
“The minister for pensions has been very clear that some tech companies are failing pension savers, that they must do more to crack down on scam adverts and should use their existing powers to stop online scammers using their site to promote fake adverts.”
What are the warning signs of a pension scam?
The Pension Regulator states that cold calling about pensions is a likely sign of a scam, as well as being illegal.
Cold calls used to be the most common approach for scammers, however, following the cold call ban that was introduced in 2019, tactics have since changed.
“Some have moved to sophisticated online models, making contact through social media, or will use friends and family to reach clusters of people,” the Pension Regulator says.
The Pension Regulator says that these are some other common signs of pension scams:
- Phrases like “free pension review”, “pension liberation”, “loan”, “loophole”, “savings advance”, “one off investment”, “cashback”
- Guarantees that they can get better returns on pension savings
- Help to release cash from a pension before the age of 55, with no mention of the HMRC tax bill that can occur
- High pressure sales tactics, like time limited offers and using couriers to send documents who then wait until they’ve been signed
- Unusual high risk investments, which tend to be overseas, unregulated and with no consumer protections
- Complicated investment structures
- Long term pension investments, which often mean people who transfer in do not realise something is wrong for several years
If you’re thinking about investing online, you should check the Financial Conduct Authority (FCA) warning list.
This is an online tool which can help you check if an investment opportunity is actually a scam by checking the type of investment you’re thinking about and searching the Warning List for firms that the FCA knows to be operating without permission, or running scams.
While this is a good place to start, be aware that even if a firm isn’t on the warning list, it could still be a scam. You can also check if the firm you’re dealing with is authorised by checking the Financial Services Register.