Abrahams - Government must act to prevent global tech firms profiting from online pension scam adverts

Oldham East and Saddleworth MP Debbie Abrahams, who is also a Member of the Work and Pensions Select Committee, has called for global tech firms such as Google to be held to account for hosting pension scam adverts, with legislation needed to stop them profiting from a multibillion-pound scam industry.

A report from the Work and Pensions Committee calls on the Government to ‘act quickly and decisively’ to protect pension savers, more than five years on from the introduction of the pension freedoms, which have put people at risk of a much wider range of scams and fraud.

The report warns that commonly cited figures of the scale of pension scamming are likely to substantially underestimate the problem.

The situation is likely to be getting worse rather than better, with the Covid-19 pandemic offering scammers new opportunities.

The Committee heard throughout its inquiry that pension scammers have moved online, with regulators powerless to hold search engines and social media to account for hosting scam adverts as they do traditional media.

Tech firms such as Google are accepting payment to advertise scams and then further payments from regulators to publish warnings – a practice the Committee describes as ‘immoral’.

The Government must now rethink its decision to exclude financial harms from the forthcoming Online Safety Bill and use it to legislate against online investment fraud. In the same way as traditional media, online publishers should be required to ensure financial promotions are authorised.

The report also calls for the multi-agency task force set up to tackle pension fraud to be strengthened.

The existing Project Bloom should be renamed the Pension Scams Centre and given dedicated funding and staffing to manage an intelligence database and law enforcement.

Currently the fragmentation of reporting, investigation and enforcement has made tackling pension scams more difficult.

The Financial Conduct Authority must also ‘raise its game’ and publish information about its enforcement action, with the Committee hearing numerous criticisms that it is not effective in stopping scams, punishing scammers or retrieving scam proceeds.

Ms Abrahams said: “The pension freedoms brought more choice for savers on how to use their pension pots, but also opened up new opportunities for scammers and fraudsters.

"It is an appalling failure by Government that a lack of online regulation has helped them reach more people than ever before.

"The result is that scammers can advertise without any checks and the large tech firms profit from online scam adverts.

“Consumers are being let down as the protections that are in place for adverts on television or a newspaper simply are not there online.  

"There must be urgent measures, included in the Online Safety Bill to ensure all adverts are regulated. 

"As I said in the debate on Online anonymity earlier this week, ‘A hands-off approach gave fledgling social media companies the room they needed to experiment with algorithms, turn profits from advertising revenue, and engage a larger user base with little social responsibility.’

"This has to change.

“Tighter online regulation must be just the first step in improving protections for savers.

"As the Select Committee has highlighted, stronger enforcement with a new Pensions Scams Centre, a more effective FCA and extra support for victims are also desperately needed. 

"Pension scams cause both huge financial harm and psychological distress. 

"The Government and the regulators musts stop playing catch-up act quickly to protect savers and their hard-earned money.”

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