Positive news in the battle against spoof advertising
In welcome news for the industry, the government has bowed to the insurer lobby to the effect that social media sites and search engines could, by law, soon stop paid-for scam adverts appearing.
The issue of paid internet adverts or so called ‘spoof ads’ is a contentious one. Accident management companies and lead generators have been using search engine adverts to intercept would-be motor accident claimants, offering their own services, and bypassing those offered by their contractual insurer. Rightly, insurers view this as being of significant detriment to their customers.
The tactic utilises advertising services in such a way that a customer is often innocently misled into believing that they are contacting and dealing with their own insurer, or that the companies involved are affiliated to, partnered with, or instructed by their own insurer.
This type of activity has become widespread and presents an increasingly serious issue for insurers, both financially and reputationally. Some of the most significant concerns are:
- Customers being misled or misinformed about the identity of the companies they are dealing with, leading to stress, anxiety, and loss of control of their personal data and possessions (their vehicle and contents)
- Customers and third-party claimants unknowingly agreeing to sign up for Damage Based Agreements (DBAs), where a proportion of their damages is retained by their appointed representative. In many cases customers are not aware that those claims can be pursued easily without any deduction where a legal expenses policy exists, or a claim is made directly against an insurer, or is made via the Official Injury Claim Portal.
- Customers losing dispute resolution avenues, such as the Financial Ombudsman Service (FOS)
- Loss of free contractual benefits such as a courtesy car or repair damage guarantees
A solution could now be available within the Online Safety Bill (“the Bill”) first published in May 2021, which was drafted with the intention of creating a new legal framework for identifying and removing illegal and harmful content from the internet.
The Bill introduces new rules for firms that host user-generated content i.e., those which allow users to post their own content online, and for search engines which will have tailored duties focussed on minimising the presentation of harmful search results to users.
Paid advertisements were not in the original scope of the Bill. However, following a series of representations from insurance industry stakeholders, the Secretary of State for Digital, Culture, Media and Sport, Nadine Dorries finally confirmed their inclusion, stating “As technology revolutionises more and more of our lives the law must keep up. Today we are also announcing a review of the wider rules around online advertising to make sure industry practices are accountable, transparent and ethical - so people can trust what they see advertised and know fact from fiction”
Under a new legal duty being added to the Bill, those internet service providers will be obligated to put in place systems and processes to block ads appearing online and remove them. The regulator Ofcom will set out further details on what platforms will need to do to fulfil their new duty via codes of practice, which could include making them scan for scam adverts before they are uploaded to their systems, and measures such as checking the identity of those who wish to publish advertisements, plus ensuring financial promotions are only made by firms authorised by the Financial Conduct Authority (FCA). Those platforms which fail to protect people will need to answer to Ofcom, who will have the power to hold companies to account by blocking their services in the UK or issuing heavy fines of up to £18 million or ten per cent of annual turnover.
In conjunction with the Online Safety Bill, the government has also launched a public consultation called the Online Advertising Programme (OAP). This will review the regulatory framework of paid-for online advertising to tackle the apparent lack of transparency and accountability across the whole supply chain. It will look specifically at paid-for online advertising to ensure holistic cover across the online content which could create harm for consumers and businesses alike.
In our view, whilst the Government’s action will be accepted positively almost universally, it must not lead to unrealistic expectations. There is no doubt that the paid advertising market for motor insurance claims has cleaned up its act in recent times and those involved in outright fraudulent behaviour are not as prominent as they once were. Instead, larger regulated organisations are now dominant in the available advertising space. They appear to be acting in accordance with current regulations, even if they do so just within the boundaries of what is acceptable.
There is no guarantee that any new laws will stop these entities from trading, although it will at least make sure that their activities are subject to more rigorous regulatory obligations and legal compliance.
The victims of spoof adverts will continue to require careful management when they appear as claimants - our clients, the court and we would not wish to penalise them in the event that they have been innocently duped through no fault of their own. Our aim is to find the right balance by punishing the suppliers involved in such cases, not the victims.
For more information on the subject or for any support in dealing with the issues raised, please contact Richard Preston, Head of Intelligence Services.
Partner & Head of Intelligence Services