Goldman-Backed Fintech Boycotts Meta Over Fraud Concerns

(Bloomberg) -- The chief executive officer of Starling Bank Ltd., Anne Boden, has a blunt new year's message for Meta Platforms Inc.: Get rid of the fraudsters if you want us to advertise with you again.

Writing in her latest annual letter, Boden said London-based Starling, which counts Goldman Sachs Group Inc. among its backers, had ceased advertising on Facebook and Instagram, saying Meta wasn't doing enough to stop scammers from using its platforms.

“We want to protect our customers and our brand integrity,” Boden said in the letter. “And we can no longer pay to advertise on a platform alongside scammers who are going after the savings of our customers and those of other banks.”

Starling's advertising boycott of Meta began in mid-December, according to a spokeswoman for the bank. Last year, the bank achieved unicorn status after Goldman Sachs and other investors put in more than 300 million pounds ($406 million), valuing the lender in excess of 1.1 billion pounds.

The digital-only bank has been a prolific user of social media platforms to advertise its services, and until late 2020 had been spending hundreds of thousands of pounds a month to advertise on Meta's main platforms, according to the spokeswoman. That spending dwindled in the past 12 months before the decision was made to cease all Facebook and Instagram advertising.

In her letter, Boden said Starling had been pushing for big tech companies to clamp down on fraudsters' use of the services. She pointed to Google's decision in August to stop accepting any financial-services advertising unless the advertiser could prove they were authorized by the U.K.'s Financial Conduct Authority, or met one of a limited number of exemptions.

“Facebook (Meta) indicated in December that it will be doing something similar to Google to stop fraudsters advertising on its platform,” Boden said. “We are still waiting to find out when and how this initiative (from TechUK's Online Fraud Steering Group) will happen.”

The FCA has made clear its concerns about the use of social media by fraudsters to promote their scams. In a speech last May, Mark Steward, executive director of enforcement and market oversight at the regulator, said that in 2020 it issued 1,204 warnings about potential scams, an increase of 100% year-on-year. Steward said at the time the FCA was engaging with social media companies on the issue.

“It cannot be right that these platforms profit from crime and yet remain beyond the reach of the law,” said Boden.

Last month, TechUK, which represents major technology companies in the U.K., said Meta, as well as Twitter Inc. and Microsoft Corp., had committed to putting in place safeguards to prevent scammers from advertising with them. In the case of Meta, the rollout of the new system is expected some time this year.

“Promoting financial scams is against our policies, and we're dedicating significant resources to tackling this industrywide issue on and off our platforms,” a Meta spokesperson said in an emailed statement Friday. “While no enforcement is perfect, we continue to invest in new technologies and methods to protect people on our service from these scams.”

Despite its paid advertising boycott, Starling is keeping its Facebook and Instagram accounts.

©2022 Bloomberg L.P.