Recommendation 4

HM Government Accepted

The Government is committed to tackling illegal advertising, including fraudulent or scam adverts; it is essential that consumers have access to fair, clear, and not misleading, information prior to any purchase. There are already specific laws which ban misleading advertising, including where this relates to NFTs. The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) are enforced by local authority Trading Standards services and the Competition and Markets Authority. These regulations state that traders must not mislead consumers by, for example, giving false or deceptive information, leaving out important information or using aggressive sales techniques. In addition, as the Committee recognises, DCMS’ Online Advertising Programme is reviewing the future regulation of paid-for online advertising in the UK. The Government response to its consultation, published in July 2023, announced that the Programme will have a targeted focus on tackling illegal advertising and increasing protections for under-18s from exposure to advertising for products and services that are illegal to be sold to them. The Government will introduce a new regulatory framework which will combat scam and fraudulent advertising, including where such advertising relates to NFTs, and will require all in-scope organisations across the online advertising supply chain to have proportionate systems and processes in place to prevent such illegal advertising from occurring. The Online Advertising Taskforce, chaired by the DCMS Minister of State, was set up to drive forward non-legislative action to tackle illegal advertising and increase protections for under-18s. The Taskforce’s remit is to improve evidence and encourage wider adoption of voluntary industry initiatives or standards. The Taskforce is considering next steps, including research and data sharing around the scale and prevalence of illegal harms, which may include the illegal advertising of NFTs and cryptoassets. Furthermore, the Government is taking decisive measures to protect people from fraudulent advertising online specifically. The Online Safety Act 2023, which recently received Royal Assent, imposes a duty on the largest user-to-user services and search engines to tackle fraudulent adverts on their services. The Government has also recently published an Online Fraud Charter, signed by the biggest companies in the tech sector, which contains a number of commitments from firms in order to reduce fraud on their platforms and services, and raise best practice across the sector. These include commitments related to online advertising. With regard to cryptoasset advertising in particular, the Government has passed legislation bringing financial promotions of qualifying cryptoassets into the existing regulatory regime for financial promotions, and since October 2023 the FCA has been undertaking enforcement action. This applies to all businesses promoting cryptoassets to UK-based consumers, whether from the UK or abroad. This means a person or firm that is not authorised by the FCA must have its promotions of qualifying cryptoassets approved by a person or firm that is authorised by the FCA before they are communicated, unless an exemption applies. This is aimed at improving consumers’ understanding of the risks and benefits associated with cryptoasset investments and ensuring that cryptoasset promotions are held to the same high standards as those in the broader financial services sector.