Google Tightens UK Financial Ad Policy to Combat Scams

Google to Verify Financial Advertisers in the U.K. Following Regulatory Pressure

Google has announced a forthcoming policy shift in response to the U.K.’s evolving digital regulatory landscape post-Brexit. The change will require advertisers of financial products and services to be verified by the Financial Conduct Authority (FCA) before their advertisements can run on Google’s platforms.

New Policy Implementation Timeline

According to Google, the updated Google Ads Financial Products and Services policy will take effect on August 30th. Enforcement of the new regulations is scheduled to begin on September 6th. This provides those distributing potentially fraudulent financial advertisements a limited timeframe to capitalize on the existing system.

FCA Warnings Prompted Action

This decision stems from warnings issued by the FCA, which indicated its willingness to pursue legal action if Google continued to host unscreened financial advertisements. These warnings were previously reported by the Guardian.

Expanded Regulatory Powers Post-Brexit

The FCA’s ability to contemplate such action is a direct result of the U.K. no longer being bound by European Union regulations concerning financial advertising. These prior EU rules did not extend to online platforms, as highlighted in the Guardian’s reporting.

Previous Efforts to Combat Online Fraud

Prior to gaining the authority to directly address Google’s policies, the FCA had been allocating substantial U.K. taxpayer funds to Google for the purpose of running anti-scam warnings. This approach essentially involved a competitive bidding situation against fraudulent advertisers.

Financial Implications of Anti-Scam Advertising

Reports from the Register indicate that the FCA spent over £600,000 (approximately $830,000) in 2020 and 2021 on “anti-scam” advertisements on Google. The regulator was, in effect, attempting to outbid scammers to ensure that warnings about financial fraud appeared prominently in search results.

Google’s Response and Policy Update

Ronan Harris, VP and MD for Google UK and Ireland, stated in a blog post that financial services advertisers will now be required to demonstrate authorization by the FCA, or qualify for specific exemptions outlined on the UK Financial Services verification page.

He further added that this update represents significant progress in enhancing user safety, and acknowledged the impact on advertisers while reaffirming the priority of protecting users from fraud.

Advertising Credits Offered

Google has also pledged $5 million in advertising credits to support public awareness campaigns regarding financial fraud in the U.K. However, this is not a direct monetary contribution.

Refund Discussions and Uncertainty

The Register reported that Google offered to refund the FCA’s anti-scam ad spend, but only in the form of advertising credits. The U.K. parliament’s Treasury Committee sought clarification on whether a cash refund would be provided, but the FCA’s director of enforcement, Mark Steward, could not confirm the details.

Concerns Extend to Social Media Platforms

The FCA has also expressed concerns regarding fraudulent financial advertisements appearing on social media platforms.

Martin Lewis and Facebook’s Response

In 2018, Martin Lewis, a prominent U.K. consumer advice advocate, initiated legal action against Facebook, leading to the introduction of a “report scam ad” button on the platform in July 2019.

Effectiveness of Reporting Mechanisms

Recent research by the consumer group Which? revealed that both Facebook and Google have not fully eliminated fraudulent financial advertisements, even after they have been reported. The BBC reported that Google failed to remove approximately 34% of reported scam ads, while Facebook failed to remove over 26%.

Incentives for Ad Platforms

This raises questions about whether the incentives for online ad giants to actively combat lucrative scam advertisements are sufficient.

Calls for Inclusion in the Online Safety Bill

Martin Lewis has been advocating for the inclusion of scam advertisements within the scope of the U.K.’s Online Safety Bill.

Scope of the Online Safety Bill

The bill focuses on regulating user-generated content, but Lewis argues that a scammer can circumvent these rules simply by paying an ad platform to promote fraudulent content, describing the situation as “ludicrous.”

Government Response and Further Action

The government has acknowledged the concerns and noted that the Home Office is developing a Fraud Action Plan. Additionally, the Online Advertising Programme will assess the current regulatory framework’s ability to address challenges posed by evolving online advertising technologies, including a planned consultation and review.

Update: A government spokesperson confirmed ongoing efforts to address online fraud and highlighted the upcoming Fraud Action Plan and Online Advertising Programme.