Facebook, Google Should Refund Scam Victims, U.K. Lawmakers Say

(Bloomberg) -- A group of U.K. lawmakers is urging the government to “seriously consider” forcing technology companies including Facebook's owner Meta Platforms Inc. and Google's parent Alphabet Inc. to refund victims of fraud on their sites.

“Placing a responsibility on online companies to reimburse consumers who are victims of online fraud could rapidly transform their approach,” the Treasury Committee's report on economic crime said. “The government should seriously consider whether online companies should be required to contribute compensation when fraud is conducted using their platforms.”

The report also called for changes to the draft Online Safety Bill to make platforms more responsible for combating financial fraud. The U.K. government should also consider requiring them to “conduct Know Your Customer checks on advertisers” to block potential fraudsters, according to the report.

Online fraud in the U.K. is surging while platforms, banks, regulators and law enforcement are often unclear about who should tackle these crimes.

Consumers reported 30,000 potential scams to the Financial Conduct Authority in the year to March 2021, up 77% in a year. The boom in cryptoassets has bred a new generation of scams, and analysis carried out last year by UK Finance, a lobby group for the finance industry, found that fraudulent advertising through search engines and social media was snaring a growing number of victims.

Social media companies have previously told the committee they are ramping up efforts to block potentially dangerous advertising, but that scammers frequently adapt their methods to evade detection.

“For too long, pernicious scammers have acted with impunity, ripping off innocent consumers with fraudulent online adverts, impersonation scams and dodgy crypto investments,” committee Chair Mel Stride said.

Other recommendations of the report include:

Creation of a single law enforcement agency with responsibility for fighting economic crime
Regulation to protect consumers from fraud and money laundering in the cryptoasset industry
Increase the cost of company formation in the U.K. to 100 pounds ($135) to deter those who wish to “set up large numbers of companies for dubious purposes.”