Govt extends Online Safety Bill to include paid-for advertising

The government has confirmed that paid-for fraudulent adverts will be brought into the scope of the Online Safety Bill, while also launching a consultation on a wider overhaul of how online advertising is regulated in the UK.

The changes aim to improve the protection available for internet users from the potentially devastating impact of fake adverts, including impersonation scams.

Whilst the government previously confirmed that the bill would cover user-generated content, it has now also added a new duty requiring the largest social media platforms and search engines to prevent paid-for scam adverts appearing on their services, whether they are controlled by the platform itself or an advertising intermediary.

Under the changes, these companies will be expected to put in place "proportionate systems and processes" to prevent the publication and/or hosting of fraudulent advertising on their service and remove them when they are made aware of it.

This is expected to help clamp down on ads with unlicensed financial promotions, fraudsters impersonating legitimate businesses and ads for fake companies, including ‘boosted’ social media posts by users which they pay to have promoted more widely.

Further details on what platforms will need to do in practice are to be provided by Ofcom, although steps are expected to include making firms scan for scam adverts before they are uploaded to their systems, and ensuring financial promotions are only made by those authorised by the Financial Conduct Authority (FCA).

Ofcom will also oversee whether companies have adequate measures in place to fulfil the duty and, whilst it will not assess individual pieces of content, it will have the power to hold companies to account by blocking their services in the UK or issuing heavy fines of up to £18m or ten per cent of annual turnover.

In addition to the changes to the bill, the government has launched a consultation on the Online Advertising Programme (OAP), which intends to complement the government’s work to establish a pro-competition regime for digital markets, with “significant interactions” expected between the programme and the Online Safety Bill.

In particular, the OAP will seek to build on this work by providing a “holistic review of the whole ecosystem for online advertising”, examining the role of actors across the supply chain in creating a transparent and accountable market.

Under the programme, harmful or misleading adverts, such as those promoting negative body images, and adverts for illegal activities such as weapons sales, could be subject to tougher rules and sanctions.

Influencers failing to declare they are being paid to promote products on social media could also be subject to stronger penalties.

Whilst online advertising currently sits under the scope of the Advertising Standards Association (ASA), the government acknowledged that the rapid growth of online advertising has presented challenges for regulation, warning that the lack of trust emerging amongst consumers could threaten to “undermine the overall sustainability of the market”.

In light of this, the consultation, which runs until 1 June 2022, included a number of number of options for the level of regulatory oversight that could be applied in an effort to bind in other actors and improve the transparency and accountability of this ecosystem.

These options ranged from a continuation of the self-regulatory framework, which would involve relying on the ASA’s existing framework enforced through their codes, through to full statutory regulation.

The government also confirmed that if industry feedback suggests that the current self-regulatory approach is not sufficient, it will seek to strengthen the statutory backstop for advertising regulation, which would introduce a statutory regulator to backstop additional areas of the ASA’s codes.

A full statutory approach, meanwhile, would involve appointing a statutory regulator with "tough enforcement powers" to introduce measures designed to increase transparency and accountability across some or all actors in the ecosystem.

It is also seeking to consult on new measures to hold intermediaries, platforms, and open display publishers to account, which may be implemented through a code like the OPNS, or through either the backstopped or full statutory approaches

The changes were announced amid growing calls for action to tackle paid-for advertising scams, with both the Work and Pensions Committee and the Joint Online Safety Bill Committee previously recommending that the bill be extended to include this.

Household names, including Sir Richard Branson and Rob Brydon, also previously called on the government to take further action on this issue, whilst the FCA also emphasised the need for legislative change, amid concerns over the limits of its powers.

Commenting on the news, Culture Secretary, Nadine Dorries, said: "We want to protect people from online scams and have heard the calls to strengthen our new internet safety laws.

"These changes to the upcoming Online Safety bill will help stop fraudsters conning people out of their hard-earned cash using fake online adverts.

"As technology revolutionises more and more of our lives the law must keep up. Today we are also announcing a review of the wider rules around online advertising to make sure industry practices are accountable, transparent and ethical - so people can trust what they see advertised and know fact from fiction.

FCA executive director of enforcement and market oversight, Mark Steward, added: “We welcome that the Online Safety Bill will now require the largest platforms to tackle fraudulent advertising.

"We have been clear about the need for legislation and appreciate the government’s positive engagement on this.

"We look forward to working closely with the government and regulatory partners as they finalise and implement the details of the draft bill."

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