UK STRUGGLES TO GET A HANDLE ON ONLINE FRAUD
Online investment fraud in the U.K. might as well be legal, and the crooks know it.
With authorities losing hope of curbing the rising incidence of fraud through policing, activists, the finance industry and market supervisors are calling for new laws imposing responsibility on online giants such as Google to choke off scammers.
But the U.K. government is equivocating on additional regulations for internet platforms, and the impact of existing controls remains limited. In the meantime, online scams involving fake firms touting unrealistic riches have skyrocketed during the pandemic as people remain stuck at home, worrying about their finances.
“We don’t have the capacity or the capability in the police to investigate fraud properly,” said Anthony Stansfeld, the police and crime commissioner for the Thames Valley area. Stansfeld was involved in investigating a fraud gang in Reading that, with insider help, preyed for years on clients of banking and insurance firm HBOS.
He estimates there could be around £100 billion of fraud against consumers in the U.K. every year, including online investment scams. While the U.K. has “got to put hugely more resources into policing it,” Stansfeld said, “there should be more pressure on online service providers to do the right thing.”
The Financial Conduct Authority issued 1,053 public warnings about unauthorized investment solicitation last year, an 82 percent jump from 2019. The real picture is likely orders of magnitude higher: Law enforcement estimates less than 20 percent of fraud is reported, while only 1 in 500 recorded incidents are prosecuted. Fraud has taken on such dimensions in the U.K. that it’s becoming a national security threat, according to think tank the Royal United Services Institute.
Anyone can be targeted, including Pat McFadden, the Labour MP in charge of the party’s financial services policy. In an interview, McFadden said both he and his wife regularly receive suspicious emails, text messages and online adverts that “seem genuine” on first glance. “It’s on an industrial scale so even if 1 in 100 people respond there will be a large number of victims,” he said. “The government needs to take this very seriously.”
The opposition MP called for financial harm to be added to the upcoming Online Harms Bill, due to come before parliament in the coming months to set strict new guidelines for the removal of illegal content such as child sexual abuse or terrorist material.
“My personal view is that this is a massive problem. We do need online service providers to take responsibility and work in a way that helps to minimize these scams,” said Mel Stride, the Conservative head of parliament’s Treasury Committee…
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