A mental health charity has called on the government to include financial harm in its proposed online safety bill, with new research painting a shocking picture of how those with poor mental health are at heightened risk online. 

 

The coronavirus pandemic has meant that nearly all transactions that used to be face-to-face are not conducted online, but protections for consumers are lagging behind – and a planned bill to better prevent online harms does not include financial harm. 

 

 

The pandemic has also had an impact on many people’s mental health. People with experience of mental health problems are at particular risk online, a new report by the Money and Mental Health Policy Institute shows.  

 

The institute says that common symptoms of many conditions – like impulsivity and low mood – could lead to uncontrolled spending or missing the warning signs of scams. People with mental health problems are three times more likely to have been victim of an online scam, compared to the wider population (23% compared to 8%), it found. Its previous research showed that despite being a minority among the total population, people who have experienced mental health problems made up the majority of those who had been scammed online. 

 

The impact of scams is increased for people with poor mental health. As they face a significant income gap compared to those without a mental health problem, of about £8,400 a year for common conditions like anxiety and depression, even small losses can leave them financially stranded, the report notes, as well as further impacting their mental health. 

 

The institute recommends that the “government and regulators should act urgently to address gaps in consumer protections online, which are leaving people with mental health problems exposed to financial harm and distress”. 

 

It is calling on the government to include scams in its upcoming online safety bill and to give regulators greater powers to tackle financial harm online. It wants to see the online safety bill to be used to give Ofcom – as the new online harms regulator – the powers to address inaction by firms on scams. 

 

Some of the consumer protection issues fall into the remit of the Financial Conduct Authority or the Competition and Markets Authority, but “the evidence we have assembled across a range of sectors suggests there are significant gaps in our network of consumer protection”, the report states. 

 

Evidence given to the Work and Pensions Committee during its inquiry into scams has shown that scammers often advertise their services online but that it takes too long to take these ads down, with a lack of regulatory grip over large tech firms. The Money and Mental Health Institute also finds that “while both the Department for Digital, Culture, Media and Sport (DCMS) and the CMA have recently looked at the system of regulation for online advertising, there has been insufficient focus on scams and there are no concrete plans to improve the prevention of scam adverts”. 

 

It wants to see the government take a proactive stance on online harms, “actively monitoring the emergence of new types of online services, evaluating the risks that they pose to different consumer groups and introducing new consumer protection where there is evidence of sufficient potential or actual harm". 

 

 

PIMFA, the trade association for wealth managers and financial advisers, consumer rights group Which?, UK Finance, the Financial Services Compensation Scheme and Work and Pensions  Committee chair Stephen Timms, alongside MoneySavingExpert Martin Lewis, have all previously called for online scams to be included in the government’s forthcoming online safety bill. 

 

“It is vital that people are protected from all forms of online exploitation and that the most vulnerable in our society are especially protected,” as fraudsters deliberately target those who are vulnerable, said Liz Field, chief executive of PIMFA. 

 

She said evidence from the Financial Services Compensation Scheme, from Which? and from its own members showed the sophistication of online scams was such that everyone is, to some degree, now vulnerable to online scams.   

 

"The online safety bill is a clear opportunity to put in place a legal framework that would help improve consumer protections against what are increasingly convincing online scams," pointing to the wide-ranging support such a framework would have from financial services and consumer protection organisations. 

 

Field added: “The internet has inadvertently facilitated fraudsters for many years but a large number of them could be prevented from making victims of consumers with greater cooperation from domain name registration services, internet service providers and online platforms such as social media and search engines. I hope the government listens to our collective concerns and acts upon them.”