Schedule 3: Timing of providers’ assessments Chapter 5: Duties about fraudulent advertising Section 38: Duties about fraudulent advertising: Category 1 services
This section sets out duties about fraudulent advertising for providers of Category 1 services. Category 1 service providers must operate their services using proportionate systems and processes designed to prevent individuals from encountering fraudulent advertisements, minimise the amount of time that fraudulent advertising is present, and swiftly remove fraudulent advertising once they are made aware of it through any means. The definition of a fraudulent advertisement to which the duties on providers apply is at subsection (3).
	Subsection (2) specifies that a Category 1 service provider must include information in its terms of service about any proactive technology that it uses to comply with its duties in respect of fraudulent advertising.
	Subsection (4) specifies that if a person is the provider of more than one Category 1 service, the duties set out in this section apply in relation to each such service.
	Subsection (5) sets out factors for determining proportionality regarding service providers’ systems and processes to comply with the duty about fraudulent advertising. These are a) the nature and severity of potential harm from fraudulent advertisement and b) the degree of control a provider has over the placement of advertisements on the service. This recognises that a provider of a Category 1 service may rely on third party intermediaries to display paid advertisements on its service, and will therefore have less control over measures to prevent posting of fraudulent adverts.