Opinion: Financial Services Advertising Fraud in 2022

Last year saw fresh rules introduced to improve the regulation and integrity of financial services advertising, but many misleading adverts continue to slip through the cracks – with ads fraudulently impersonating household brands still displayed prominently on Google. It is clear there is far more for regulatory bodies and the financial services industry to do.

August 30th marked a major change to how many UK financial adverts are handled. Google introduced new verification requirements for lead generators to comply with before being permitted to advertise financial services. Lead gen firms must either receive Direct Authorisation from the FCA, be flagged as an Appointed Representative or Introducer Appointed Representative by the business looking to buy leads or be vouched for by them.

Many of these options make the lead buyer increasingly liable for any ad violations, and no firm wants to be publicly sanctioned by the FCA – something that could impact brand reputation, consumer confidence and the bottom line. The new rules should be a catalyst for lead buyers to conduct a thorough review of their lead gen operations and suppliers.

Does verification go far enough?

While action from digital ad hosts is a welcome first step, it is not a comprehensive solution to fraud. For lead buyers paying a fixed cost per lead – and unwitting consumers subjected to marketing campaigns they neither expected nor requested – more can be done by lead generators, buyers and the industry to address this threat.

Lead buyers – and the broader financial services industry – should look to intensify scrutiny around lead buying partnerships and lead quality, attempting where possible to individually certify the customer journey, data handling, and capture method behind each lead.

What lies ahead?

Will the FCA and government stop at compelling solely Google to tighten ad rules? Unlikely. 2020 research indicates Google controls just over a fifth of the global advertising market – leaving a significant market for unscrupulous lead generation firms to continue hosting fraudulent financial adverts. For platforms such as Bing, Facebook and Yahoo, it can only be a matter of time until the net tightens further.

These alternative major players in the advertising space may choose to enact similar – or stricter – registration processes, but equally likely is the introduction of legislation by the government to clamp down on digital ads, given the current focus on internet safety.

Simple tactics are slipping through the regulatory net

Contact State recently flagged the return of brand spammers to Google’s search results for leading UK financial firms, with ads masquerading as legitimate brands. What was the elaborate method to circumvent Google’s new registration system? A single special character added to the name of a trusted brand, easily missed by the casual search user.

This was a relatively simple deception, but unscrupulous lead gen firms have assembled an array of tactics to mislead the public – from impersonating trusted financial brands to promising non-existent product benefits – that can be replicated across many digital advertising platforms. Lead buyers must remain vigilant over lead provenance and quality to avoid purchasing non-compliant consumer data.

Don’t be caught out – the onus is on the lead buyer

Although lead gen firms bear the brunt of regulatory requirements, lead buyers are not immune and must prepare accordingly or face equally damaging sanctions.

If a ‘vouched for’ lead gen firm is caught running fraudulent ads or mishandling consumer data, regulators can also clamp down on the business buying and using the leads. Looking beyond regulator scrutiny, leads are the lifeblood of sales and marketing operations, and simply pausing all lead gen activities out of caution could cause major brand damage.

To ensure business continuity and confidence in purchased lead quality, financial firms should adopt a high degree of scrutiny when dealing with FCA-authorised lead generators or vouching on behalf of such firms. This should include high levels of visibility into the lead gen process, tracking the customer journey and all relevant data exchange, and independently certifying each lead where possible to ensure full compliance.

Time for the industry to step up – data certification holds the answer

Fraudulent advertising tactics can also evolve as fast as the regulations can be enacted against them, whether by circumventing rules or simply expanding operations into new, less regulated markets and platforms.

Financial services firms must therefore carry out due diligence on all purchased leads and lead gen partners – from vetting customer touchpoints to ensure data integrity and embracing data certification of legitimate leads, to normalising reports of non-compliant lead gen firms and misleading adverts.

End-to-end transparency and data compliance must become the gold standard of financial services marketing – not simply a lead gen box-ticking exercise.

About the author: Alain Desmier is the founder and managing director of  Contact State - a lead-generation investment company based in Poole, UK. He describes himself as a seasoned internet entrepreneur driven by the energy that comes from building new products, solving problems, and making progress. He says, "I believe in treating people fairly, rolling the dice when you've got a good business idea and showing up for work every day, especially when it's easier to give up."