Online Safety Bill updates: duty to prevent scam adverts and Online Advertising consultation

On 8 March 2022, the Government announced a further extension of the remit of the Online Safety Bill, in tandem with the launch of an online advertising consultation process.

In summary:

• A new legal duty is to be added to the Online Safety Bill requiring social media platforms and search engines to prevent paid-for fraudulent adverts appearing on their services.
• In parallel, the Government is launching a public consultation process on proposals to strengthen rules for the online advertising industry, including greater powers for regulators to tackle harmful and misleading adverts, which will close on 1 June 2022.

Background

The Government published the first draft of its far-reaching Online Safety Bill (the 'Bill') on 13 May 2021 (see our previous blog post here). On 14 December 2021, the joint parliamentary committee published its 193-page report, recommending changes to the Bill such as the expansion of the scope of the Bill to cover harmful paid-for advertising and the introduction of criminal liability for tech executives responsible for systemic compliance failures (see our previous blog post here). Since then, the DCMS has announced two additional requirements for so-called "category 1" platforms (i.e. the larger/higher-risk platforms): a 'user verification duty' requiring that these platforms give users the option to verify their identity, and a 'user empowerment tools duty' stipulating that these platforms enable users to control the content they can see and the users they interact with. More recently on 14 March the DCMS announced that the Bill would introduce 'cyberflashing' as a criminal offence.

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

Updates to the Bill

Under the changes announced on 8 March, a new duty will be added to the Bill requiring social media platforms and search engines to prevent paid-for fraudulent adverts appearing on their sites. This will include adverts controlled both by the platform itself and by advertising intermediaries, as well as posts which have been 'sponsored' or 'boosted' through payments by social media users themselves.

Companies will be required to implement proportionate systems and processes to prevent or minimise the publication and hosting of fraudulent advertisements on their services and remove such advertisements when they become aware of them. While it is currently unclear what 'proportionate' will mean in practice, details of the practical requirements will be set out by the regulator, Ofcom, by way of the codes of practice which Ofcom will be required to publish under the Bill.

Ofcom will oversee the measures that companies have in place to comply with their duty and will have the power to block companies' services in the UK or issue fines of up to £18 million, or ten per cent of a company's annual turnover, in cases of non-compliance.

Consultation process

In the same press release, the Government announced a separate launch of a 12-week public consultation on their Online Advertising Programme (the 'OAP').

The consultation will consider proposals to toughen sanctions for harmful or misleading adverts. Under the broad drafting of the Bill, such adverts could range from those promoting negative body image to those concerning illegal activities. The consultation will also consider whether influencers failing to declare that posts are part of a paid promotion should be subject to stronger penalties. As part of the process, ad-funded platforms and intermediaries will come under the OAP's remit as the Government assesses whether those at every level of the supply chain should be doing more to prevent harmful advertising.

In addition, the OAP will scrutinise the powers and role of the Advertising Standards Authority (ASA) and the existing self-regulatory framework to determine whether both 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, future powers for the regulator could include:

• the ability to set mandatory codes of conduct and enforce them with fines or bans for repeated rule-breakers;
• increased scrutiny across the supply chain for high-risk advertising (such as for products related to alcohol or weight loss), including ensuring measures are in place to avoid targeting vulnerable audiences; and
• information gathering and investigatory powers.

Commentary

Service providers will need to await further detail from Ofcom on what compliance with the duty to prevent harmful advertising will mean in practice, but this is a further example of policy-makers shifting the burden of regulatory compliance away from content generators (in this case the advertisers) towards the platforms through which that content is ultimately disseminated. What is clear, however, is that service providers will have to do much more both to comply with this new legal duty and demonstrate their compliance to the regulator. Providers should take the time before Ofcom's announcement to assess the measures they currently have in place to minimise fraudulent advertising and prepare to roll out a more substantial set of processes in order to avoid the risk of criminal liability. Providers whose platforms enable 'sponsored' or 'boosted' posts are likely to require a much more extensive set of internal controls.

Meanwhile, the Government intends to respond to the OAP consultation and outline its proposals for reform of online advertising later this year. With the prospect of significant alterations to the regulatory landscape on the horizon, including a potential move from self-regulation to statutory regulation, participants at all levels of the advertising value chain, from individual influencers to advertising agencies and the largest multi-national corporations, should keep a close eye on the consultation's progress. In particular, those involved in the online promotion of regulated products (such as alcohol or nutritional products) may wish to re-assess their current policies and procedures for avoiding harmful and misleading advertising.