AI Scams: UK Shoppers Face Rising Fraud as Social Media Profits Soar

The pressure is mounting on social media platforms to take greater responsibility for the surge in AI-fuelled Authorised Push Payment (APP) fraud, a growing problem costing consumers and payment service providers millions of pounds. Lord McNicol of West Kilbride, co-chairman of the Open Finance and Payments All-Party Parliamentary Group (APPG), has been vocal about the require for platforms like X (formerly Twitter), Facebook, and Instagram to do more to combat scam advertising.

The issue centers around the proliferation of fake advertisements online, a problem exacerbated by the rise of artificial intelligence. These scam ads, often impersonating trusted brands, exploit social media algorithms to gain prominence in search results, enticing users with offers for in-demand products or fraudulent services. The ultimate goal is to steal money, financial information, or login credentials from unsuspecting victims.

APP fraud occurs when individuals are deceived into voluntarily transferring funds or sharing bank details. The scale of the problem is significant. Estimates suggest that UK shoppers encounter roughly 185 scam ads each month. In 2025, the UK saw an estimated 95 billion scam ad impressions, a figure projected to rise to 137 billion by 2030.

While government efforts to strengthen consumer protection laws have yielded some positive results – with payment service providers reimbursing 87% of scam-related losses since October 2024 – the financial burden on these providers is increasing. Juniper Research data indicates that UK shoppers lost £44 million to fake ad scams in 2025, a figure expected to reach £84 million by 2030. Juniper Research provides data and strategic insights into the evolving payments landscape.

The Revenue Stream of Deception

A particularly concerning aspect of the issue is the revenue generated by social media platforms from these scam ads. It’s estimated that these platforms earned £3.8 billion from scam advertising in 2025, representing approximately 10% of their total ad revenue. With social media advertising projected to grow by 120% over the next five years, reaching a value of £84 billion by 2030, the potential for further profit from fraudulent activity remains substantial.

This disparity – platforms profiting from scams while consumers and payment providers bear the financial consequences – is fueling calls for greater accountability. The Payments Association, the trade body representing payment service providers, is advocating for a latest shared responsibility framework. This framework would allocate liability for economic crime proportionally based on fraud origination data, recognizing that much of the fraud originates on social and messaging platforms.

The Payments Association is likewise proposing an extension of the Economic Crime Levy to include social media and telecommunications companies. Currently, the levy – a government charge imposed on businesses regulated under Anti-Money Laundering laws – funds initiatives to combat money laundering and economic crime. The UK government’s policies on economic crime are available on its official website.

A Call for Shared Responsibility

The current system, while improving consumer protection, doesn’t adequately address the root cause of the problem: the proliferation of scam ads on social media platforms. A fundamental shift in responsibility is needed, with platforms taking a more proactive role in preventing fraud.

Specifically, the Payments Association urges platforms to sign up to the Online Fraud Charter and enhance their fraud detection protocols. Strengthening the verification process for online advertisements is also crucial. This includes implementing more robust checks to ensure the legitimacy of advertisers and the accuracy of their claims.

Data sharing is another critical component. New legislation is needed to facilitate better data exchange across industries, enabling a more coordinated response to online fraud. AI, while contributing to the problem, can also be a powerful tool for detecting fraud trends and coordinating responses across payments, telecoms, e-commerce, and law enforcement. Emerging technologies like transaction monitoring algorithms and real-time alerts are essential in identifying and combating scam ads.

The Role of Regulation and Technology

Lord McNicol, speaking in the House of Lords on January 22, 2026, highlighted the importance of the UK Government’s AI Risk Register, introduced in 2023, in addressing these challenges. Hansard records of Lord McNicol’s contributions demonstrate his focus on the intersection of technology and financial crime.

The effectiveness of the AI Risk Register, and similar regulatory initiatives, hinges on the ability to adapt quickly to the evolving tactics of fraudsters. The speed at which AI-powered scams are developing requires a dynamic and responsive regulatory framework.

What’s Next: A Multi-Stakeholder Approach

The fight against online fraud requires a collaborative effort involving the government, regulators, banks, social media platforms, telecommunications firms, and payment service providers. Currently, the level of commitment varies significantly across these stakeholders.

The Payments Association’s proposals for a shared responsibility framework and an expanded Economic Crime Levy represent a concrete step towards a more equitable distribution of the burden. But, the ultimate success of these initiatives will depend on the willingness of social media and telecoms companies to fully engage and invest in fraud prevention measures.

Looking ahead, several key developments will shape the landscape of online fraud prevention. Further refinement of AI-powered fraud detection tools, coupled with enhanced data sharing protocols, will be crucial. Legislative updates to address the evolving threat landscape and clarify liability frameworks are also essential. The ongoing dialogue between industry stakeholders and policymakers will be vital in ensuring a coordinated and effective response to this growing menace.

a proactive and collaborative approach is necessary to protect consumers, safeguard the financial system, and prevent social media platforms from profiting from deception.