Six cryptocurrency platforms, alongside pizza brand Papa John’s, have had adverts banned by the Advertising Standards Authority (ASA) for “taking advantage of consumers’ inexperience” in digital currencies.
The crypto platforms under fire from the regulator are eToro, Coinbase, CoinBurp, Payward, Exmo Exchange and Luno Money, all of which were also accused of failing to “illustrate the risk of investment” in cryptocurrencies.
Papa John’s was censured for a promotion running on its website and Twitter account promoting the brand’s partnership with crypto exchange Luno. The ads on the Papa John’s website read “Free Bitcoin worth £10″, while on Twitter the brand offered “Free Bitcoin worth £10” for every pizza bought via its ‘£15 off when you spend £30’ promotion.
Despite not attempting to get consumers to invest, a stipulation of the promotion was customers had to open a Luno account.
The ASA ruled that customers who engaged in a promotion linked to buying pizza were likely to be inexperienced in their understanding of cryptocurrencies and the inherent risks. The regulator noted the adverts also contained no risk warnings about cryptocurrency.
In the case of eToro, a paid for ad on the Yahoo Finance website included text which stated: “Invest in the world’s top cryptos with one click” and “Discover eToro’s unique BitcoinWorldwide offering, a ready-made portfolio, holding the world’s leading crypto assets”.
The ASA had issues with the ad for being “irresponsible”, claiming it “took advantage” of consumers’ inexperience and was deemed misleading as eToro failed to communicate the risk of investment. EToro acknowledged its ad was not issuing the appropriate risk warning and blamed this on a lapse in its media review process.
However, the brand argued the ad did not suggest cryptocurrency is easy to comprehend, stating its “one click” claim referred to the efficiency in providing a diversified crypto portfolio, compared to manually creating one.
The ASA understood eToro’s explanation, but argued consumers could interpret cryptocurrencies are simple and require no knowledge to take part, which it says is not true.
Coinbase, meanwhile, was rapped for a Facebook ad with text stating: “£5 in #Bitcoin in 2010 would be worth over £100,000 in January 2021. Don’t miss out on the next decade – get started on Coinbase today”.
There were also bullet points in the ad which stated the cryptocurrency was “simple and easy to use”, had “never been hacked” and was “trusted”.
The ASA, however, banned the ad for not including any risk warning to make consumers aware cryptocurrencies could increase or drop in value. As the cryptocurrency is also currently unregulated in the UK, the ASA considered the message to be “misleading”.
Director of complaints and investigations, Miles Lockwood, says cryptocurrencies are a “red alert” priority for the regulator, adding that further rulings in the coming weeks will shape its enforcement work to “bring all crypto assets ads into line” with its standards.
The body will continue to review crypto ads and also broaden its scope to adverts for non-fungible tokens (NFTs).
“Consumers need to know about the risks of investing in crypto assets and companies should make sure that their ads aren’t misleading or socially irresponsible by taking advantage of consumers’ lack of awareness around these complex and volatile products,” says Lockwood.
“We won’t hesitate to take action against ads that break our rules. We encourage anyone with any concerns about ads they’ve seen to get in touch.”
Around 2.3 million adults in the UK are estimated to hold cryptocurrencies, despite warnings from regulators such products could rapidly lose their value. The average value of crypto wallets grew from £260 a year ago to £300 in 2021, according to the Financial Conduct Authority.