Cabinet proposes making major online platforms liable for fraudulent content

Taipei, May 9 (CNA) The Executive Yuan on Thursday approved an anti-fraud package mandating that multinational digital platforms offering advertising services must assist in identifying, reporting, and removing fraudulent content, or risk hefty fines and even service suspension.

The new legislation and amendment proposals will require large digital services to appoint a "legal representative" in Taiwan to ensure compliance with local regulations, Lin Chun-hsiu (林俊秀), deputy head of the Administration for Digital Industries (ADI) said at a Cabinet press briefing.

Those platforms will be obliged to remove or restrict access to fraudulent advertisements or messages, suspend services for users suspected of fraud, and report relevant illegal activities to the police, he said.

They will also need to verify and disclose the identity of those who wish to run advertisements using their services, and label advertisements with deep-fake or AI-generated content, Lin said.

At the same time, those companies, along with payment processors, e-commerce platforms and online game providers, will be required to cooperate in fraud investigation by providing information regarding fraud suspects and their transaction records, he added.

Failure to comply with those regulations will lead to a fine ranging from NT$2.5 million (US$77,066) to NT$25 million or even the suspension of their services in Taiwan, according to the ADI under the Ministry of Digital Affairs.

Currently, platforms including Google and Meta Platforms, Inc., which owns Facebook, will take down fraudulent advertisements upon receiving reports from government agencies, but they are not accountable for any illegal content.

One key aspect of the proposed package involves requiring large online platforms to have a "legal representative," which according to Minister without Portfolio Lo Ping-cheng (羅秉成) can be an individual, a legal entity, a law firm, or an accounting firm.

What constitutes large platforms remains to be discussed and determined by lawmakers after the proposal is sent to the Legislature for approval, Digital Minister Audrey Tang (唐鳳) told the press conference.

However, notable services such as Google, Line Corporation, and Meta Platforms, are expected to be included, Tang said, noting that she recently communicated with their representatives about the government's plans.

However, Cabinet officials seemed uncertain about how to designate TikTok, a video sharing app which, according to a 2023 report issued by the Taiwan Network Information Center, has become the third biggest social media platform in Taiwan.

According to Tang, while TikTok could potentially qualify as a "large digital platform," it is unclear whether the company is owned by Chinese investors to an extent that would subject it to other laws governing Chinese investment in Taiwan.

The question concerning TikTok remains "hypothetical" until the company's ownership structure is known by Taiwanese authorities and the Cabinet's proposal is approved by the Legislature, Lo said.

If service platforms continuously fail to comply with regulations, such as appointing a legal representative or removing fraudulent content, their services can be restricted or suspended in Taiwan, Lo said, citing the Cabinet's proposed package.

He added that such measures would be "a last resort" left to the discretion of an independent panel of experts to be formed following the passage of the proposal.

The proposed legislation and amendments seek to more effectively block fraudulent activities and locate their source, Lo said.

While the government's efforts to curb fraud have seen "significant improvement" following a series of measures taken in 2022, such "serious crime" is still prevalent, Lo acknowledged.

According to Lo, in 2023 the law enforcement intercepted NT$9.3 billion of private funds which it prevented them from flowing to perpetrators of fraud, while also seizing a record-high amount of NT$3.8 billion in illegal gains from fraud.

The Cabinet's proposal has referenced the European Union's Digital Services Act and seeks not to infringe human rights and personal freedom, Lo said.

Meanwhile, Premier Chen Chien-jen (陳建仁) said the package would "complement" the current deficiencies in legal tools, enabling the government to more effectively combat fraud and protect the public.

Chen said he hoped lawmakers across party lines would back the proposal so it can clear the Legislature and become law as soon as possible.