Tech giant Meta is under pressure to verify the credentials of anyone advertising financial products to Australian consumers on Facebook to counter the deluge of dodgy ads purporting to offer ultra-low home loan rates on the platform.
A number of advertisements, which claimed to offer home loan rates of 2.89 per cent or 3.29 per cent at a time when it was impossible to get a rate below 4 per cent, were brought to Meta’s attention last month.
“If it sounds too good to be true, it almost certainly is,” said the chief marketing officer of comparison site Compare Club, Rich McPharlin, who raised the issue with Meta mid-November.
Meta is being urged to adopt policies requiring the verification of those advertising financial products and services on Facebook.Credit: Supplied
While a number of the dodgy ads and the webpages behind them have since disappeared or been removed, McPharlin said he was still seeing ads in his Facebook feed for mortgage rates of under 3 per cent in the lead up to Christmas.
“I can guarantee [those rates] just do not exist,” he said. “But they are sucking in people that are desperate. There’s been quite a few rate rises, it’s Christmas, people are trying to save money.”
“I think a consumer would expect a media platform of the size of Facebook to have some kind of vetting process. But clearly nothing exists of that nature … and therefore the onus is on the consumer to do their due diligence
Advertisers of regulated credit products, such as mortgages, in Australia must hold the appropriate licence. They also have to ensure the ads aren’t misleading or deceptive or face enforcement action from the Australian Securities and Investments Commission (ASIC).
An ASIC spokesman said that print advertisements for credit products must also include the advertiser’s Australian credit licence details and, if they are showing an annual percentage, a comparison rate.
“While the requirements for online advertisements are less prescriptive, ASIC considers that best practice for online advertisements involves disclosing licence details and, where applicable, comparison rates,” he said.
“Where consumers see advertisements that don’t include these details, they should treat them with caution.”
Meta in Australia does not check whether advertisers have the relevant financial services licence before allowing them to use Facebook to advertise financial products.
In a response to the concerns about the ads, a Meta staff member said in an email to McPharlin that while individual ads could be reported, “advertisers are responsible for understanding and complying with all applicable local laws and regulations, including ensuring that they are authorised by the relevant authorities and that they provide disclosures required by law”.
Meta did not respond to a detailed list of questions on its policy in Australia. However, a spokesman said that the examples of the dodgy ads sent to the company by The Age and The Sydney Morning Herald had been removed from Facebook.
“All advertisers that promote financial products and services must adhere to our policies and follow local applicable laws,” he said. “We’ve removed the content for violating our policies.”
Google recently introduced rules in Australia requiring financial services advertisers to be externally verified and demonstrate that the relevant regulator directly authorises them to undertake financial services activities before they show financial services ads.
In the UK, Meta recently made it mandatory for any advertiser that wants to run ads promoting financial products or services on Facebook to be registered with the UK Financial Conduct Authority.
ASIC is now encouraging Meta to adopt a similar policy in Australia.
“In August this year, Google implemented a policy requiring verification for advertisers promoting financial products and services to ensure they are authorised by ASIC. Meta, Facebook’s parent company, has a similar policy in the UK, but has not implemented such a policy in the Australian market,” an ASIC spokesman said.
“ASIC encourages digital platform providers, including Meta, to adopt policies requiring the verification of those advertising financial products and services, as evidence from other jurisdictions suggests that such policies significantly disrupt scam activity and misleading and deceptive advertising.”
McPharlin also said that these kinds of changes should be considered by Meta’s Australian team to enhance consumer safety.
“I think [Meta] provide a fantastic tool suite for advertisers to be able to reach the consumers they want,” he said.
“But it’s challenging for consumers to understand … the validity of who those advertisers are. I think that’s essential to this issue, it’s such an anonymous black box as to who these advertisers are, how they decide to target you, whether they are legitimate. It really brings into question the entire ecosystem.”
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