Illustration of a consumer falling victim to online ad fraud with a scammer pushing a fake advertisement

Several UK banks recently proposed a “polluter pays” approach to online ad fraud that would hold Big Tech firms like Alphabet, Apple, and Meta more accountable for losses originating from their platforms. The proposal comes at a time when scams are rampant, and many victims first encounter fraud through fake ads on social media or telecom providers. However valid the argument, there is a way to go before Big Tech companies will go along with the banks’ proposal.

That said, banks can take several steps to clarify their role as intermediaries in online advertising scams and call attention to Big Tech firms’ frequent role as facilitators.

Tech is Enabling a Fraud Explosion

A recent story in Reuters highlights the personal impact of digital and online advertising scam problems. A woman named “Anna” responded to an email offering a discount on an electric toothbrush by offering her payment information. But a few minutes later, she received a call warning her that the transaction was fraudulent and that her savings account was being targeted. This caller turned out to be a fraudster. Anna saw her life savings drained within a few weeks.  

Diagram outlining how fraudsters use tech platforms to reach victims in 5 stages

Like Anna, many victims first encounter these scams through emails delivered by telecom providers or ads on social media. This makes these parties unwitting facilitators of these crimes. Stories like this are much too common in the UK, where experts say people are more likely to be victims of scams than any other type of crime. The figures speak for themselves:

Will Big Tech Become a Fraud-Fighting Ally? 

It’s little wonder why banks support the “polluter pays” framework that would require the parties who introduced the pollutant to pay for the damages. 

However, it has taken years to shift scam liability from consumers to banks. It would take even more time to even convince Big Tech players to come to the negotiating table. Such talks would delve into the share of liability Big Tech is willing to assume and even more time spent discussing how to distribute loss allocations. 

But the bigger issue is that Big Tech does not view scams perpetrated on their platforms as a significant problem. These scams are dwarfed by the losses Big Tech faces from click fraud, a type of ad fraud that inflates pay-per-click (PPC) online advertising. 

Click fraud occurs when advertisers pay fees for clicks on their ads, believing the clicks are from real customers. However, the clicks are actually generated by an automated program or bot, resulting in inflated lost advertising budgets. This type of fraud is projected to cost businesses $44 billion in 2022. 

4 Ways Banks Should Address Fake Ad Fraud

While banks might not yet be able to shift scam and fraud liability to Big Tech firms, there are still several steps the industry can take now to make the case why liability should fall to the facilitators of the scam instead of the intermediaries. 

1. Connect the Fraud Sources

Banks typically play the role of the middlemen in scams. Fraudsters first push their scams to consumers and convince them that they have something of value to offer. If the consumer believes the scam, they might send the scammer their money. In this model, banks wind up being the facilitator of fraud between the victim and the scam’s source. But it’s unfair to label banks as the problem in this model. Banks can push back against this perception by highlighting the direct connection between the original source of a scam and how it ultimately resulted in fraud. 

This knowledge is critical for banks to demonstrate that they are not ultimately responsible for fraud, and therefore should not be considered liable. If the fraud originated on a Big Tech platform, the argument can be made that Big Tech should ultimately bear liability for the ad fraud losses.

2. Report Fraud Losses by Source, not Scam Type

It’s impossible to fix a problem that you can’t measure. For banks, this means adjusting their reporting processes to focus on the source of scams, not just the types of scams. By collecting this data, banks can start to build the case for where the scams originate and how their organizations fit into their overall execution. By using every available piece of data and analysis, banks can spotlight Big Tech’s role in enabling ad fraud scams. From there, banks can address Big Tech’s liability share.

3. Support Customers

Scams take a significant toll on victims. And not just financially. The emotional toll on victims makes them distrustful of others. Banks must both help their customers avoid falling for scams and offer them assistance if they fall victim to one.

Banks should share the scam origination findings with customers. This evidence will help them understand the scope of the scam threat. Customers will be able to spot a scam when they search online and use social media and avoid falling into fraudsters’ pitfalls. Focusing on the source of a scam – instead of industry jargon like phishing, smishing, vishing, investment scams, and others – will help customers understand the nature of the threat more easily.

If a customer is a scam victim, offer them support. This includes emotional assistance to help victims understand how the scam occurred in the first place, and take the time to listen to them. They’ve gone through a lot, and need a reassuring voice on the other end of the phone.  

Gathering details about the scam supports customers in difficult situations. It will also help Big Tech companies understand their role in enabling scams. If a Big Tech firm is willing to listen to how the scam unfolded, it can learn and improve its defenses to protect its users.

4. Collaborate on Industry-Wide Statistics

When it comes to fighting fraud and scams, there’s power in numbers. Make industry-wide inquiries to learn if other banks have experienced similar issues with scams originating from a Big Tech source. Collaborate on scam data-sharing to further understand the source of scams. This will benefit the greater financial services industry, not just your own bank. The industry must band together to convey the message that banks are not only not the source of scams – but are working together to help Big Tech improve their own platforms.