Regulator blames global tech giants for increasing consumer fraud

*The Federal Trade Commission says social media platforms ‘tolerate and promote’ frauds, especially during the pandemic

Gbenga Kayode | ConsumerConnect

Contending that fraudsters use social media platforms to take advantage of unsuspecting consumers amid the pandemic, US Federal Trade Commission (FTC) Chairwoman has accused global technology companies otherwise known as the “Big Tech” of monopolistic behaviour.

Lina Khan, Chairperson of FTC, has said these companies are also responsible for a surge in consumer fraud during the pandemic, agency report said.

While appearing before the House Energy and Commerce Committee, in the Congress, Khan alleged that fraudsters are using social media platforms to take advantage of unsuspecting consumers.

She said: “Fraud has continued to surge. One reason is that fraud today is supercharged by digital platforms where this conduct is tolerated and even promoted.”

Fellow FTC Commissioner Rohit Chopra also elaborated on the problem facing regulators, telling lawmakers that the commission needs to understand the platforms’ algorithms, so it can understand how scammers use them to target their victims.

Chopra said: “We can’t just go after fraudsters one by one, we need to look at the gatekeepers and those who profit from amplifying them as well,” Chopra said.

In the meantime, FTC reportedly faces challenges to cracking down on fraud.

On social media platforms, she observed that there are few if any actual “gatekeepers.” According to her, the result of Section 230 of the Communications Decency Act (CDA), the agony’s Chairperson explained that the provision states that Internet platforms cannot be held legally responsible for content on their sites posted by a third party.

That issue, report stated, is currently a point of contention in the ongoing debate about COVID-19 misinformation that’s being posted on social media sites.

However, traditional media outlets such as newspapers and TV stations are accountable for the contents they provide, the law says Internet companies are not.

Khan as well informed the American lawmakers that the FTC faces other challenges, from staffing and budget to legal restrictions placed upon it by the US Supreme Court.

Khan stated: “The Commission’s ability to tackle key challenges – from COVID fraud to anticompetitive conduct – has been substantially diminished after the Supreme Court’s recent decision in AMG, which barred the Commission from seeking monetary relief under Section 13(b) of the FTC Act.”

While testifying in the Congress, Khan said that the FTC is facing “severe resource constraints” as it works to address the soaring number of global mergers and acquisitions and an increasing number of consumer complaints to the agency.

She, therefore, asked the committee to consider additional resources to help it effectively achieve its mission.

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