Google clings on to cash from bogus ads

Google is earning tens of millions of pounds every year by allowing unregulated and fraudulent investment schemes to advertise on its search engine to unwitting savers.

But the internet giant, now worth more than $1 trillion (£760bn), holds on to the cash even when it discovers that advertisers are misleading or potentially defrauding investors.

Scam victims, consumer groups and Telegraph Money are calling on Google to use the money it makes from banned advertisers to help savers directly or donate it to relevant charities. The firm has so far declined to hand any money back or help in any way apart from removing ads that break its rules.

Unscrupulous firms are free to bid for the top spot in search results via paid-for adverts. Savers have piled huge sums into high-risk schemes even when they have searched for terms such as “safe investments”.

Telegraph Money is aware of at least 20 cases in which suspected scam websites have been reported to the financial regulator already this year. In each case, the websites were promoted above legitimate firms by Google.

Rogue firms can manipulate the system so that cautious consumers who search for safe investments and “protected” savings bonds are led to high-risk ventures or entirely fraudulent sites.

The search engine removed more than three billion “bad ads” – which violate its policies – in 2017. The price firms pay Google depends on the popularity of the term and could range from a few pennies to £15 or more.

The search engine said it had rules and codes of conduct in place to protect consumers, but this newspaper has uncovered numerous examples of ads that break its policies. A cursory look at many sites uncovers obvious warning signs, including a lack of contact details or bogus accreditation from the City watchdog, the Financial Conduct Authority (FCA), and the Financial Services Compensation Scheme (FSCS). Both organisations have expressed concern that consumers are being fooled.

In an interview with Telegraph Money, Caroline Rainbird, the head of the FSCS, warned that in many cases scam firms that had been closed down were able to trick search engines simply by setting up again under a slightly different name. Some rogue companies have listed non-existent office addresses and links to fake news articles containing false endorsements of Bitcoin trading from participants in the BBC’s Dragons’ Den.

The FCA has issued a series of warnings on the websites and has been in talks with Google and others on how to stamp out the high-risk ads since May last year, when this newspaper exposed the scandal.

This week it also emerged that senior executives at the regulator are increasingly frustrated that Google is not properly vetting advertisers. In an email, its chief executive, Andrew Bailey, complained that the FCA was “having to do Google’s job” itself. Campaigners have expressed

Rogue firms are making the search giant rich, but it refuses to help victims, report Harry Brennan and Adam Williams

concern that Google is reluctant to properly address the issues because of the vast sums they generate for its business.

Last year, London Capital & Finance (LCF) collapsed after it collected £236m from around 12,000 investors in its unregulated “mini-bonds”. It paid Google more than £20m for promotions to attract more customers, cash Google has held on to.

Andrea Hall of LCF Bondholders, a campaign group for those affected, lost £10,000 in the scheme. She said: “We all assume Google is safe and use it every day, but it’s not the case. It should now invest the money it has made off the back of these people into a better system.”

If the company does not solve the problem, Parliament should give more powers to the FCA or force Google to make changes, she added.

This week, the Government announced new rules that will force social media firms, including Google, to protect children from harmful content, following this newspaper’s Duty of Care campaign. The company has already voluntarily banned firms from advertising on certain search terms, after interventions from this newspaper. Last year, it said it would no longer allow companies to promote themselves to users seeking debt advice. It has also removed adverts for scam websites that charge a fee for government services that are free if arranged directly.

A Google spokesman said: “Consumers often look online for help with financial decisions, but there are businesses that purposely set out to mislead them.

“Protecting consumers and the credible businesses operating in this area is a priority for us, which merits careful rules and enforcement. We are working with the FCA and other independent experts on a scalable and long-term solution to ensure that consumers are protected.”

‘Google should put the money it’s made from scam ads towards fixing the problem’