Overlooked and underregulated: Online spaces and financial harms
12 February 2020
Today the government has announced new plans to give Ofcom (the communications regulator) more powers to regulate social media firms, and to ensure they comply with a ‘duty of care’ to protect users from harmful content.
This announcement is part of the government’s broader plans to tackle online harms, and we were pleased that it also acknowledged the need to address potential financial harms associated with online spaces. This is a key concern for us at Money and Mental Health, as our work shows that easy access to shopping online, and the increasing availability of online credit, can result in consumers falling into debt, or getting into serious financial difficulties. We know that people with mental health problems are particularly likely to face issues around spending and impulsivity, and may be disproportionately affected by online financial harms.
We’ll be further exploring this subject in a report later this year, and trying to ensure that the government makes combatting online financial harms a priority. In the meantime, here are some of the issues currently missing from public conversation about reducing online harms:
Only a click away
We have all been in a situation where we really want to buy something that might be out of budget. In a physical shop it may be easier to contemplate your decision and walk away – having to actually pick up the item, hand over cash and interact with a cashier gives you more time to think over your purchase and change your mind. However, the online world has remarkably few barriers to counter impulsive spending. With virtually ‘frictionless’ transactions, people can spend hundreds or even thousands of pounds with the click of a mouse.
Our research has shown that 93% of people spend more when they are experiencing mental health difficulties. With many retailers and banks giving consumers easy access to credit, it has become easy for consumers to make impulsive purchases that they may not be able to afford. Schemes like ‘Buy Now Pay Later’ are more likely to attract those with mental health problems. The ease with which people can access credit and spend money has implications for those with mental health problems, especially people who struggle with impulsivity. While there has been great progress, with some financial firms giving customers the tools to block certain types of spending, such as gambling, and a ban on the use of credit cards when gamblling, more still needs to be done to protect vulnerable customers.
Another big concern we have is that people struggling with money and mental health problems could be more vulnerable to online fraud – and are actually being targeted by scammers. When you’re in a difficult situation, Google is the first port of call for many. For those struggling with debt, it is often an invaluable resource, connecting them with useful charities and helplines. However, recent reports have found that scammers have been using Google to promote fake debt charities which can lead people into receiving unsuitable and incorrect advice. With the Financial Conduct Authority recently admitting that it had “no power” to stop these scams, it is imperative that the government and regulators improve protections of online spaces.
Help us make things better
There is so much that we need to do to protect people with mental health problems from potential online financial harms. Later this year we will be undertaking a research project on these issues, and we want your help and ideas. If you would like to help shape our research, please join our Community. With your input, we can tackle the potential risks people experiencing mental health problems face online.