As people spend longer shopping online, scammers pounce through Google and Facebook.
Online pension scams run through social media sites are surging as people are stuck at home in lockdown, regulators and police warned MPs today.

Scammers have become increasingly skilled at advertising fake pension investments through Google, Facebook and other digital means, and the increased use of the internet by the public to buy shopping and services has created a fertile environment for the scammers, officials from the Financial Conduct Authority, the Pensions Regulator and police told the work and pensions committee.

Mark Steward, executive director of enforcement and market oversight at the FCA said: “We have seen a significant increase happening for two or three years but that has now sped up in the last 12 months. People are spending more time at home, online and because you need to do a lot of shopping online, the opportunity to be attracted by too good to be true investments is very real.”

He repeated the FCA’s complaint that there is no regulation of advertising over the Internet, and pointed out how easy it was for crooks to set up online scams.

“In the past they might have had to set up quite a sophisticated outfit of glossy brochures, office fronts and people to appear to be a legitimate business, now all they need is an online advertisement which can be created very easily.”

Social media companies were now being paid twice from scams, he admitted. First they get paid by the scammers for their ads, then they are paid by the FCA to advertise scam warnings.

“The irony is rich that social media gets a fee from the scammer as well as the regulator.”

Companies hosting the scam websites were also getting paid by the scammers.

He said unlike traditional media such as newspapers, social media was unregulated and there were few “gateway controls” on ads on search engines, Twitter or Instagram.

He said the FCA had “started a dialogue” with social media firms to address this but it did not have powers to enforce them, rather having to negotiate, “which isn’t necessarily the fastest way to get things done, particular with things that might affect the revenue of the organisations we’re talking to.

“We are getting positive responses but we would like to see far more effort. 

“The objective of these discussions is to get a significant reduction in online scams but we are not seeing that. In fact, we are seeing the numbers continuing to increase. It’s going the wrong way.”

He said investment fraud should be included in the proposed Online Harms Bill, which currently does not include it.

Industrialised online scamming

He said social media was set up so scammers could “industrialise the process” with multiple ads offering many different products on a daily basis.

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