Background
This Ruling forms part of a wider piece of work on land and property investments. In two of the cases, the ads were identified for investigation following intelligence gathering by our Active Ad Monitoring system, which uses AI to proactively search for online ads that might break the rules.
Summary of Council decision:
Three issues were investigated, all of which were Upheld.
Ad description
A paid-for Facebook ad and a website for Connect UK Land Auctions, seen on 13 August 2024:
(a) The Facebook ad stated, “Calling all Property & Land Investors. Get Exclusive Land Auction Investment Opportunities with 10-30% ROI […] Join Our Investor Mailing List Exclusive land auction investment opportunities sent directly to your inbox!”
(b) The website landing page, www.connectuklandauctions.co.uk, included the claim “When selling land at auction you can actually achieve more than you would with a local estate agent.”
Issue
1. The ASA challenged whether ad (a) was misleading because it failed to illustrate the risk of the investment.
The ASA further challenged whether the following claims were misleading and could be substantiated:
2. “10-30% ROI” in ad (a); and3. the claims in ad (b) that higher prices could be achieved by selling land at auction rather than by using an estate agent.
Response
1. Connect UK Sales Ltd (Connect UK) said they had been unaware of the need to insert a disclaimer that illustrated the risk of the investment. They said they had suspended their investment advertising pending the outcome of the investigation.
2. Connect UK said ad (a) was addressed to people who already owned or were ready to purchase a parcel of land. Prospective purchasers joined a mailing list which would alert them when large parcels of land became available. Once purchased, the parcel would be divided into smaller plots, with the help of solicitors and the Land Registry. Connect UK would then market the smaller plots individually at a 20 to 30% higher price than the subdivided value of the original purchase. They said buyers would pay more for a smaller parcel of land because it was more affordable than a larger one. They pointed out that the strategy therefore worked only for large plots of land, and that they explained this fully to prospective purchasers. They provided two case studies along with the contact details of previous sellers and current buyers for the land featured in those examples.
3. Connect UK referred to the case studies they had provided.
Assessment
1. Upheld
The CAP Code stated that marketing communications should make clear that the value of investments was variable and, unless guaranteed, could go down as well as up.
Ad (a) stated, “Exclusive Land Auction Investment Opportunities with 10-30% ROI”. It therefore promoted the buying and selling of land at auction as an investment opportunity. The rate of return on investment was stated in definitive terms and the ad contained no text warning that the value of investments was variable and could go down as well as up.
Because the ad did not make clear that the value of investments was variable and could go down as well as up, we concluded that it was misleading and breached the Code.
On that point, ad (a) breached CAP Code (Edition 12) rules 3.1 (Misleading advertising), 3.9 (Qualification) and 14.4 (Financial products).
2. Upheld
The CAP Code stated that before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers were likely to regard as objective and that were capable of objective substantiation.Ad (a) stated, “10-30% ROI” and did not feature any qualifying information. We considered that consumers would understand from the ad that they would achieve the stated level of return on their investment. We also considered that they would expect Connect UK to hold robust evidence to support that objective claim.We acknowledged Connect UK’s point that their strategy was based on the subdivision of large parcels of land. The case studies they provided detailed the subdivision of two large plots of land in September 2021 and May 2024. The first plot, valued by a local estate agent at £25,000 and sold to a purchaser on Connect UK’s mailing list for £48,500, was split into two lots which together sold for £138,500. That represented a 185.6% increase in final value. The second plot, valued by a local estate agent at £950,000, was subdivided into 20 lots which together sold for £1,242,000. That represented a 30% increase in final value.
However, because the case studies related to only two examples, one of which was several years previously, we had not seen sufficient evidence to substantiate the claim that a return on investment of 10–30% was generally achievable for investors using Connect UK’s services. We concluded that the claim was likely to mislead.
On that point, ad (a) breached CAP Code (Edition 12) rules 3.1 (Misleading advertising) and 3.7 (Substantiation).
3. Upheld
Ad (b) stated, “Did you know that when you sell your land at auction you can achieve a much higher price than you would with a local estate agent?” We considered that consumers would understand from the claim that land sold by auction would be likely to sell for a considerably higher sum than if that land were sold by an estate agent.
Connect UK commented in their case studies that the auction process typically involved a shorter selling timeframe and was less likely to be subject to lengthy negotiations or the sale falling through. While the case studies provided examples of an estate agent valuation that was considerably lower than the final sale price, we had not seen evidence to show that the increase could be attributed to the method of sale. The quoted figures for estate agents were for valuations rather than sold prices, and we had not seen evidence that selling prices achieved by estate agents for equivalent plots of land were generally lower than those sold at auction. We considered that we had not seen sufficient evidence to substantiate the claim and concluded that it was misleading.
On that point, ad (b) breached CAP Code (Edition 12) rules 3.1 (Misleading advertising) and 3.7 (Substantiation).
Action
The ads must not appear again in the form complained of. We told Connect UK Sales Ltd to ensure that future ads made sufficiently clear that the value of investments was variable and could go down as well as up. We also told them to ensure they held documentary evidence to substantiate both their investment claims and their claims comparing prices achieved at auction and by estate agents.
