The rapid growth of the internet has created numerous opportunities for businesses to advertise their products and services – the digital landscape has witnessed a significant transformation even in the last three years. However, alongside these opportunities, concerns regarding online safety have also escalated. Here, James Corlett looks at the Online Safety Act and the regulation of fraudulent advertising. 

The UK, home to a dynamic advertising industry, has taken a proactive stance in addressing these concerns by enacting the Online Safety Act. This landmark legislation not only seeks to protect individuals from online harm but also has noteworthy implications for the world of advertising. Now the Act applies primarily to search engines but smaller businesses could be in the firing line due to its broad scope.

The Online Safety Act, passed by parliament last week, aims to regulate user-generated content on online platforms and social media networks, making them accountable for the content they host. While the Act primarily focuses on tackling issues like cyberbullying, hate speech, and harmful content, it also addresses the broader impact of online advertising. Fraudulent advertising and scams have been persistent problems in the UK. The act aims to offer enhanced protection to consumers in this context, especially at a time when they are increasingly vulnerable, such as during the cost of living crisis.

One of the content types the act is concerned with is fraudulent adverts, whilst there is a wider consultation the Government is conducting on advertising generally, the act contains standalone fraudulent advertising-related duties as a result of the urgency of the problems these adverts present.  This empowers individuals to play a more active role in ensuring that online advertising remains ethical and within the boundaries of the law. Advertisers will need to be vigilant in monitoring the content of their advertisements to avoid potential legal ramifications.

Ofcom is required to prepare and issue a code of practice describing measures recommended to comply with the new fraudulent advertising related obligations raised by the Act. Service providers falling under the scope of this will have to assess and possibly enhance their processes for onboarding advertisers and receiving advertisements on their services. They must also establish effective reporting mechanisms to promptly identify and remove potentially fraudulent ads. This regulation could also bring about changes for brands, agencies, and other participants in the online advertising industry when they advertise on these regulated services.

Ofcom possesses various enforcement powers, including the authority to impose fines on in-scope services, with penalties of up to £18 million or 10% of their annual global turnover, whichever is higher.

However…!

While the Act brings commendable changes to the advertising landscape, in my view it poses challenges for businesses. Smaller advertisers might face increased compliance costs and complexity in navigating the new regulations. Additionally, the Act could potentially limit creativity in advertising, as businesses need to be more cautious about the content they promote online. It has also come under heavy criticism from key platforms that are now ubiquitous in the life of your average UK citizen, there is a risk that not all services offered by these platforms will be made available in the UK in the future, meaning that there could be a wider negative impact on innovation and utility.

If you have any questions or require any further advice on this topic, get in touch with our specialist teams today at hello@beyondcorporate.co.uk

[This blog is intended to give general information only and is not intended to apply to specific circumstances. The contents of this blog should not be regarded as legal advice and should not be relied upon as such. Readers are advised to seek specific legal advice.]