“Europe has an ever-increasing number of laws institutionalising censorship and making it difficult to build anything innovative there.” – Mark Zuckerberg, Meta founder and CEO

While the European Commission rejects Zuckerberg’s assertion (stating that the European Union’s laws only require the removal of illegal content), the Meta founder and CEO’s willingness to make such a public statement in the first place seems to reflect a shift in the position adopted by the U.S. tech sector and one to which fraud fighters around the world ought to pay attention.

The scale of online fraud: A social media and search engine crisis

The internet has improved the lives of many, transforming commerce and empowering legitimate businesses to reach new customers. It’s also – with an assist to various social media and search platforms – brought about unprecedented levels of fraud across the developed world.

The infrastructure and algorithms that have powered the digital revolution are vulnerable to abuse, with reports suggesting annual losses running into the billions of dollars. Banks in the UK determined that 77% of all cases and 32% of authorised push payment (APP) losses originate online.

In Australia, Scamwatch reports Australians lost more than $3 billion AUD to fraud in 2022. Social media ads and search engine results played a significant role in enabling these fraudulent activities.

The FBI’s Internet Crime Complaint Centre (IC3) has recorded more than $10 billion in losses attributed to online scams within the United States alone.

NASDAQ’s 2024 Global Financial Report estimates global scam losses at more than $485 billion.

Governments have sought to respond through the provision of voluntary undertakings and new legislation. The UK’s Online Safety Act and Australia’s Scams Prevention Framework are examples of such legislation, with both potentially resulting in financial penalties for non-compliant tech companies.

The UK's Online Safety Act: A model at risk?  

The United Kingdom’s Online Safety Act, enacted in 2023, stands as a pioneering piece of regulatory framework designed to combat the proliferation of harmful online content, encompassing scam advertisements and fraudulent financial promotions. This legislation mandates tech platforms proactively identify and remove such content, subjecting non-compliant entities to substantial fines.

Tech leaders have recently made no secret of their desire to see less regulation rather than more – a position the new administration in the U.S. appears to mirror or support. With the new administration demonstrating a willingness to take a disruptive approach to trade, Commentators have speculated that the UK may come under pressure to soften its stance as part of negotiations to arrive at a trade agreement.

That pressure could be significant when you consider the United Kingdom currently ranks as the U.S.’s ninth-largest goods trading partner, with a total two-way goods trade of $138.5 billion in 2024. Notably, the United States maintained a goods trade surplus of $10 billion with the United Kingdom in the same year.

“Safety is not up for negotiation. There are no plans to weaken any of our online safety legislation.” – Peter Kyle, UK Secretary of State for Science, Innovation, and Technology

While the UK Government has stated it will not alter its stance, it seems unlikely the tech sector would not seek to lobby the U.S. Government to fight in its corner.

Australia’s Scams Prevention Framework: A stronger stand?

The U.S. has a large bilateral trade surplus with Australia, which is one of the few countries the U.S. isn't in a deficit with. While Australia initially took a different approach (focusing on industry-wide obligations rather than targeting social media and search engines alone), the new Scams Prevention Framework imposes mandatory requirements on telecommunications, banking, and digital service providers to detect, prevent, and report scams.

While the existence of a trade surplus could be said to reduce the U.S.’s room to maneuver, it seems likely that trade is the only geopolitical factor when it comes to measures the tech sector may consider unpalatable.

Will the U.S. weaken global scam prevention efforts?

The current administration has been open about its preference for deregulation and already demonstrated a willingness to use the U.S.’s economic muscle to influence the policies and laws of other jurisdictions.

Three factors could impact global scam prevention efforts:

• If the U.S.-UK trade negotiations resume, the U.S. could potentially apply pressure to weaken the Online Safety Act’s requirements for U.S.-based platforms.

• Reduced efforts in the U.S. to moderate content on platforms could impact users in other jurisdictions.

• The U.S. administration, in pursuing a policy of deregulation, could seek to support tech platforms in their challenging of the legitimacy of laws in other jurisdictions, asserting those laws violate free speech or unduly impinge on the rights of U.S. businesses. 

A crossroads in global fraud prevention

The fight against scams is at a critical juncture, with digital fraud surging to unprecedented levels and governments striving to implement stricter safeguards.

These efforts come at a time when shifts in the U.S.’s position on a range of geopolitical issues could have an impact beyond its own borders. It would be naïve of us to believe trade pressure couldn’t undermine international scam-prevention laws and diminish the accountability of tech companies.

As the world grapples with the increasing impact of digital fraud, we must ask the question: Will global leaders prioritize consumer protection, or will the interests of Big Tech take precedence?