Scammers use online ads, mostly on Google, to distract people from their pension funds, report released by the Work and Pensions Selection Committee says, but regulators are “powerless” to hold companies to account Internet.
After accepting payment for advertisements from criminals, tech companies are making more money by hosting public scam warnings from regulators such as the Financial Conduct Authority, according to the MPs report.
“He should not demand legislative solutions to deter global corporations from profiting from the proceeds of crime, but unfortunately legislation is clearly needed,” the report said.
Although the government proposes to introduce an online harm bill to parliament later this year, it will focus on child sexual abuse and terrorism, with no mention of the internet fraud epidemic. .
During its investigation, the committee heard testimony from the pension scams industry group that 40,000 people had been defrauded to the tune of £ 10bn since 2015, with online fraud typically costing £ 190bn. pounds sterling per year.
MPs say internet companies should be covered by legislation that already requires newspapers and broadcasters to control financial advertisements or face legal liability. Stephen Timms, the chairman of the committee, told the Observer: “These companies shouldn’t take the crooks ‘money and put the material they provide on their platforms, and then also take the regulators’ money to warn people about the crooks.”
The FCA, he said, would ask Google and others to remove the fraudulent ads, but no action would be taken for weeks.
“There has to be a duty of care in this area, as in the case of child pornography and the other things that are supposed to come within the scope of this bill,” Timms continued. “The intention of the government appears to be to exclude financial harm from this bill. I think it’s really important to seize this opportunity. ”
Fraud accounts for a third of reported crimes, but less than 1% of police resources are spent investigating it, Graeme Biggar, chief executive of the National Economic Crime Center, told the committee. Law enforcement is shared between the police and seven regulators.
Action Fraud, the City of London Police-run national call center, has been trying to rebuild its reputation since the Times revealed in 2019 that most cases had never been investigated and that staff had made fun of the victims like “morons.”
The FCA was also criticized during the investigation for failing to end the scams or recovering the proceeds of crime and for securing only 25 convictions. MPs called for the creation of a dedicated pension scam center to manage an intelligence database and enforce the law.
Young victims of fraud often suffer a double whammy of losing their pension funds and then facing large tax bills on the money they lost, the report says. People who access their pension fund before the age of 55 have to pay fees of up to half the value of the fund. Scammers often persuade people there are loopholes, MPs say, but this is wrong and HMRC is “relentless and uncompromising” when it pursues scam victims for the tax owed.
As a result, some victims never report the crime for fear of tax penalties, the report says. MPs called on HMRC to “exercise some discretion” and said the law should be amended so that tax is withheld at source.
There was also evidence of “secondary con artists” – fraudsters who stole people’s pensions and then re-target their victims by masquerading as claims handling companies. The bogus firms would cold call the victims, offering to help bring a lawsuit against their insurance advisor, would charge fees up front, then disappear.