Background
On 8 October 2023 the FCA took over the regulation of ads for ‘qualifying cryptoassets’ – cryptoassets that are transferable and fungible, including cryptocurrencies and utility (fan) tokens – and introduced new rules. However, cryptoassets as a product remain unregulated. As of this date, complaints about misleading non-broadcast advertising for qualifying cryptoassets will be referred to the FCA for their consideration. The new rules do not cover cryptoassets that are non-fungible, such as Non-Fungible Tokens (NFTs), or Limited Payment Tokens that can only be redeemed with the issuer and used for the payments of specific goods and services, such as non-monetary customer loyalty points, and the ASA will continue to regulate all ads for these products.
Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Ad description
Posters for cryptocurrency exchange service Luno, seen across the London Underground and London Buses networks in February 2021, featured a cartoon image of a Bitcoin with text that stated "If you're seeing Bitcoin on the Underground, it's time to buy".
Issue
The ASA received three complainants:
1. Three complainants, who believed the ad failed to illustrate the risk of the investment, challenged whether it was misleading.
2. One complainant challenged whether the ad took advantage of consumers’ inexperience or credulity.
Response
1. & 2. Luno Money Ltd said that the ads would not appear again in the form complained about. They said that their future ads would feature an appropriate risk warning. Outsmart said they had reviewed the creatives in accordance with Global’s copy approval guidelines. They had previously sought CAP Copy Advice for the ad, and had been advised that the ad was likely to be in accordance with the CAP Code. Global did not have any further comments.Assessment
1. Upheld
The CAP Code required that marketing communications for investments made clear that the value of investments was variable and, unless guaranteed, could go down as well as up, and also that significant limitations and qualifications were stated and presented clearly. The ASA understood that initial capital invested in Bitcoin was subject to price fluctuations which could result in both losses and gains in value. We considered that consumers would interpret the statement “If you’re seeing Bitcoin on the Underground, it’s time to buy” as a reference to buying Bitcoin as an investment.
The ad appeared across the London Underground and London Buses networks, which were untargeted media, and was therefore likely to have been seen by consumers who did not have extensive financial knowledge and experience of Bitcoin, and would expect that the exchange of Bitcoin would be regulated, with legal protection in place for investment activities. We understood that neither Luno nor the Bitcoin market in general was regulated within the UK, and therefore consumers could not seek recourse to services such as the Financial Services Compensation Scheme or the Financial Ombudsman Service.
We considered the fact that Luno and the Bitcoin market were unregulated to be material information that consumers required in order to make informed decisions about Luno’s service, and should have been made clear in the ad. While we welcomed Luno’s assurance that their future ads would feature risk warnings to consumers, at the time the ad appeared it had not featured any risk warning making sufficiently clear to consumers that the value of Bitcoin could go down as well as up, or that the Bitcoin market was unregulated in the UK. We therefore concluded that the ad was misleading.
On that point the ad breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
3.3
3.3
Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
(Misleading advertising), and
14.4
14.4
Marketing communications must make clear that the value of investments is variable and, unless guaranteed, can go down as well as up. If the value of the investment is guaranteed, the marketing communication must explain the guarantee.
(Financial products).
2. Upheld
We considered that consumers would interpret the statement “it’s time to buy” as a call to action and that the simplicity of the statement gave the impression that Bitcoin investment was straightforward and accessible. We understood that Bitcoin investment was complex, volatile, and could expose investors to losses and considered that stood in contrast to the impression given by the ad, that investment was simple and conventional. For that reason, we concluded that the ad irresponsibly suggested that engaging in Bitcoin investment through Luno was straightforward and easy, particularly given that the audience it addressed, the general public, were likely to be inexperienced in their understanding of cryptocurrencies, and was therefore in breach of the Code.
On that point the ad breached CAP Code (Edition 12) rules 1.3 1.3 Marketing communications must be prepared with a sense of responsibility to consumers and to society. (Social responsibility), and 14.1 14.1 Offers of financial products must be set out in a way that allows them to be understood easily by the audience being addressed. Marketers must ensure that they do not take advantage of consumers' inexperience or credulity. (Financial products).
Action
The ads must not appear again in the form complained about. We told Luno Money Ltd to ensure that their future marketing communications made sufficiently clear that the value of investments in Bitcoin was variable and could go down as well as up, that Luno Money Ltd and the Bitcoin market were unregulated, and that they did not irresponsibly take advantage of consumers’ lack of experience or credulity by implying that Bitcoin investment was straightforward or accessible.
