Flawed regulation of fraudulent online advertising, has allowed scam adverts, such as those impersonating Martin Lewis to promote crypto advice, to thrive - Which? research finds.
New research produced in partnership with cyber security experts, Beruku Identity, examined how fake online adverts cause harm to consumers, the motivations and tactics of fraudsters, and how the digital advertising ecosystem allows scammers to find access points to advertise to consumers.
According to key industry insiders interviewed for this research, only 1% of the digital advertising supply chain is currently safe from this type of fraud.
A complex supply chain and limited regulation mean scam adverts are an appealing way to make money for fraudsters, who are earning nearly £1m a day through scam ads.
Scammers who create fraudulent ads, known as malvertising, also create fake agencies and enter ad buying platforms where fake adverts are published.
When ads are reported and taken down, fraudsters can continually pop up again under new identities.
The majority of this type of fraud is carried out by organised criminal groups that are financially motivated, taking vast sums of money from unsuspecting consumers.
The prevalence of these fraudulent ads is widespread, appearing across platforms and mainstream news websites. A Which? investigation carried out earlier this year found that targeted ads impersonating news articles contained offered by unregulated firms.
Data crunched in this latest research shows that the UK and Canada have the largest number of victims of malvertising outside of the US, this is in part due to the shared language allowing scammers to repurpose ad-copy to target victims.
The research found that most advertising fraud solutions focus on the harm done to the advertiser, not the consumer.
Consumers suffer psychological and financial harm from malvertising scams, with some becoming the victims of criminal recruitment in the fraudsters' business models through callous scams like fake job adverts.
Emotional distress is caused due to the financial loss as well as the embarrassment that comes with discovering you’ve been scammed, making some consumers hesitant to report the scam.
Victims also have had their data stolen and devices compromised due to malware infections.
Regulators need to learn about the evolving tactics of these fraudsters and develop the appropriate tools and processes to combat this type of fraud.
A preventative approach to protecting consumers is necessary for the many platforms that use the open display market. The government’s draft Online Safety Bill doesn’t include protection against the type of fraud ads researched in this report.
Rocio Concha, Which? Director of Policy and Advocacy, said:
‘Our research on the open display advertising market shows how organised crime gangs have been able to exploit weak online advertising regulation to build a smash and grab business model that can make them almost a million pounds in a day from scamming unsuspecting consumers before their activities are shut down.’
'It’s clear that this is another situation where governments and regulators need to act quickly to catch up with tech-savvy criminals. The government should use its Online Advertising Programme work to move from a failed reactive approach to one based on prevention and force online platforms and other players in the advertising ecosystem to protect consumers from fraudulent and misleading adverts.’
'This needs to be backed up by a statutory regulator with powers to crack down on the problem and prevent these adverts appearing in the first place and which requires ad tech providers to collect and share data on scams.’
Which? believes that a statutory regulator is needed with the powers to: