MPs on the Treasury select committee have launched a blistering attack on Google and Facebook for failing to tackle online financial fraud amid concerns the companies are letting scammers run rampant on their platforms.

Senior figures from amazon, Google, Fecebook and Ebay appearing before Westminster’s Treasury Select Committee in its inquiry into “combatting economic crime” accused the social media giants of “the lack of real muscle put into detecting financial fraud”.

Around £2.3bn was lost by UK consumers last year through online scams, with a large chunk of this coming through social media, according to UK consumer champion – Which.

Researchers found that consumers lost around £535m through online investment scams alone.

New laws have been proposed in the government’s Online Safety Bill, which would clamp down on social media users running scams off their profiles.

However, the Treasury Select Committee has called for the proposed legislation to go further and to take account of financial fraud that takes place through paid advertisements on social media.

Treasury Select Committee member, and Labour MP, Siobhain McDonagh pointed out that Silicon Valley giants were making money from these scam operations.

“We know financial fraud is a huge growth area and we know it’s inadequately policed,” she said.

“Social media companies earn a lot of money by offering fraudulent deals and seem to have no consequences for doing it.

“The lack of real muscle put into detecting financial fraud and scamming threatens our reputation as a country.”

The Financial Conduct Authority (FCA) has previously called for more stringent regulation of social media websites when it comes to online fraud.

It was revealed by Labour MP Rushanara Ali earlier this year that the regulator pays Google £600,000-a-year to post scam warnings.

Mark Steward, FCA executive director of enforcement and market oversight, said at the time that the “irony of us having to pay social media to publish warnings about advertising that they are receiving money from is not lost on us”.

Giving evidence at the hearing, Google UK’s director of trust and safety, Amanda Storey said “a problem of this scale requires cross-industry collaboration” and that firms should only take advertising money from FCA-accredited users.

“Google was the first technology company to join industry body Stop Scams UK to develop best practices,” she said.