The chair of the Financial Conduct Authority (FCA) has renewed calls for a crackdown on scam ads posted on Google (GOOGL), suggesting the search engine giant is earning “millions” from inappropriate ads.
“We need a framework to stop social media platforms and search engines from promoting unsuitable investments, including scams, to ordinary retail consumers,” FCA chair Charles Randell said in a speech on Tuesday.
“It is frankly absurd that the FCA is paying hundreds of thousands of pounds to Google to warn consumers against investment advertisements from which Google is already receiving millions in revenue.”
UK consumers lost over £1bn ($1.3bn) last year investing in high-risk, unregulated ‘mini-bonds’ — investment products that promise high returns but often go bust or are outright scams.
Randell said mini-bonds “have little or no place in the savings plans of most individual savers”.
Online advertising plays a key role in drawing in unwitting consumers and the FCA has repeatedly criticised Google for failing to do more to clamp down on these ads. Yahoo Finance UK reported last year on how mini-bond schemes were gaming Google AdWords to post inappropriate ads alongside search results for savings.
The FCA ultimately banned adverts for mini-bonds last December but they have continued to appear online. Campaigner Mark Taber has so far reported 280 scam ads to the FCA so far this year.
“The epidemic is getting worse rather than better,” Taber told Yahoo Finance UK.
The FCA has resorted to buying ads on Google to warn against the these risky investments. Randell said the regulator would be “saying more about the issue of high risk investments in the near future.”
A spokesperson for Google said: “UK consumers often look online for help with financial decisions but there are businesses who purposely set out to mislead consumers. Protecting consumers and the credible businesses operating in this area is a priority for us, and we take this responsibility seriously.
“For the last few months, we’ve been working closely with the FCA to identify and take action on sites that intend to mislead or deceive consumers. We will continue to work with the Financial Conduct Authority and other independent experts on scalable and long term solutions.”
Google took down 2.7 billion adverts that violated its policies last year and took action against 14.8 billion ads that didn’t contain the appropriate disclosures. In the US, Google has also started to require advertisers to verify their identities before taking out ads.
Campaigner Taber told Yahoo Finance UK: “Of course Google should be doing more but government needs to bring them within the law so that they are liable for the adverts they charge to publish in the same way traditional media is.”
He said the FCA should “be tracing and taking action to stop and prosecute the main scammers who keep readvertising”.
Randell’s comments came in a speech about how the financial system should respond to the COVID-19 pandemic.
“We need to be open to redesigning the system so that it better protects ordinary retail investors from investments which are highly unlikely to be suitable for them, and ensures that firms which market unsuitable investments don’t pass the bill for their misconduct on to well-run firms,” Randell said.
Part of that involves gaining “better tools to stamp out the marketing of scams online by unauthorised firms,” Randell said.