Online Safety Bill Updates: Obligation to Prevent Ad Fraud and Consultation on Online Advertising

On March 8, 2022, the government announcement a further extension of the mandate of the Online Safety Bill, alongside the launch of a consultation process on online advertising.

In summary:

  • A new legal obligation must be added to the Online security bill requiring social media platforms and search engines to prevent paid fraudulent advertisements from appearing on their services.
  • At the same time, the Government is launching a public campaign consultation process on proposals to strengthen rules for the online advertising industry, including increased powers for regulators to tackle harmful and misleading advertising, which will end on June 1, 2022.

context

The Government published the first draft of its far-reaching Online Safety Bill (the “Bill”) on May 13, 2021 (see our previous blog post here). On December 14, 2021, the Joint House Committee released its 193-page report, recommending changes to the bill such as expanding the scope of the bill to cover harmful paid advertising and introducing criminal liability for technology executives responsible for systemic issues. compliance failures (see our previous blog post here). Since then, the DCMS has announcement two additional requirements for so-called “category 1” platforms (i.e. larger/higher risk platforms): a “user verification obligation” requiring that these platforms give users the ability to verify their identity, and a “user empowerment tools requirement” that these platforms allow users to control what content they can see and who they interact with. Most recently, on March 14, the DCMS announcement that the bill would introduce “cyberflashing” as a criminal offence.

The bill already provided for a duty of care for internet service providers (including search services and user content sharing platforms) to undertake risk assessments of illegal content, to protect the safety of children and other vulnerable users and to guarantee freedom of expression. The original draft also required regulated providers to take additional proactive action on the most harmful ‘priority’ forms of illegal content online, including terrorism and child sexual abuse and exploitation. On February 4, 2022, the DCMS announced that this list of priority offenses would be further expanded to include fraud and financial crime (among other offences). Although the move was welcomed by many, the government subsequently came under sustained pressure to go further and bring fraudulent online advertising within the scope of the bill, which appears to have prompted the announcement. government on March 8.

Bill updates

As part of the changes announced on March 8, a new obligation will be added to the bill requiring social media platforms and search engines to prevent paid fraudulent advertisements from appearing on their sites. This will include advertisements controlled by both the platform itself and advertising intermediaries, as well as posts that have been “sponsored” or “boosted” through payments from social media users themselves.

Businesses will be required to put in place proportionate systems and processes to prevent or minimize the posting and hosting of fraudulent advertisements on their services and to remove such advertisements when they become aware of them. Although it is currently unclear what ‘proportionate’ will mean in practice, the details of the practical requirements will be set out by the regulator, Ofcom, through the codes of practice which Ofcom will be required to publish under Bill.

Ofcom will oversee the measures companies have put in place to comply with their obligation and will have the power to block companies’ services in the UK or impose fines of up to £18million, or 10% of a company’s annual turnover, in cases of non-compliance.

Consultation process

In the same press release, the government announced the separate launch of a 12-week public consultation on its online advertising program (the “OAP”).

The consultation will consider proposals to toughen penalties for harmful or misleading advertisements. Depending on the general drafting of the bill, these ads could range from those promoting negative body image to those about illegal activities. The consultation will also consider whether influencers who fail to declare that posts are part of a paid promotion should face stiffer penalties. As part of the process, advertising-supported platforms and intermediaries will fall under OLHI’s jurisdiction as the government assesses whether those at all levels of the supply chain should do more to prevent harmful advertising.

In addition, OLHI will review the powers and role of the Advertising Standards Authority (ASA) and the existing self-regulatory framework to determine whether the two are fit for purpose in their current form. Options include strengthening the ASA’s existing powers and increasing its funding, or creating a new statutory regime and regulator entirely. In either case, the future powers of the regulator could include:

  • the ability to establish mandatory codes of conduct and enforce them with fines or bans for repeat offenders;
  • increased monitoring throughout the supply chain for high-risk advertising (such as for alcohol or weight loss products), including ensuring that measures are in place to avoid target vulnerable audiences; and
  • information-gathering and investigative powers.

Remark

Service providers will have to wait for further details from Ofcom on what meeting the obligation to prevent harmful advertising will mean in practice, but this is another example of policymakers shifting the burden of regulatory compliance from the content generators (in this case, the advertisers) to the platforms through which that content is ultimately delivered. What is clear, however, is that service providers will need to do much more to comply with this new legal obligation and demonstrate compliance to the regulator. Providers should take the time before Ofcom’s announcement to assess the measures they currently have in place to minimize fraudulent advertising and prepare to deploy a more substantial set of processes to avoid liability risk criminal. Vendors whose platforms allow “sponsored” or “boosted” posts are likely to require a much more extensive set of internal controls.

In the meantime, the government intends to respond to OLHI’s consultation and present its proposals for online advertising reform later this year. With the prospect of significant changes to the regulatory landscape on the horizon, including a potential shift from self-regulation to statutory regulation, players at all levels of the advertising value chain, from individual influencers to advertising agencies and largest multinationals, should closely follow the evolution of the consultation. In particular, those involved in the online promotion of regulated products (such as alcohol or nutritional products) may wish to re-evaluate their current policies and procedures to avoid harmful and misleading advertising.