UK's Advertising Standards Authority (ASA) has decided to ban seven cryptocurrency ads on grounds of being misleading and "irresponsibly taking advantage of consumers' inexperience and for failing to illustrate the risk of the investment." The banned advertisements include those by popular Pizza chain Papa John's Pizza, as well as a host of reputed crypto exchanges in Coinbase, Kraken, Etoro, and Luno. The watchdog also declared crypto assets as a "red-alert priority."
Besides giving specific instructions to each company about what they must do to comply with its advertising standards in the future, the ASA ordered all the companies to ensure they don't appear again.
"The ads were addressed to a general audience and we considered that most of those who engaged in a promotion linked to buying pizza were likely to be inexperienced in their understanding of cryptocurrencies and the risks inherent in doing so," explained the UK advertising watchdog.
The advertisements included one from pizza chain Papa Johns which promoted “free bitcoin worth £10 [roughly Rs. 1,017.44]" and "Save £15 [roughly Rs. 1,526.51] when you spend £30 [roughly Rs. 3,052.32] or more & get £10 [roughly Rs. 1,017.44] worth of Bitcoin from Luno!" on its website and Twitter. The authority considered whether these ads were irresponsible because they "took advantage of consumers' inexperience or credulity" and trivialised investment in crypto.
Papa John's said that the ads made no comment on investing in Bitcoin and the promotion only offered a mechanism for customers to get free Bitcoin. They likened the promotion to a discount on products or a cashback offer, the only difference being that the saving was paid in Bitcoin.
But the ASA said that as part of the promotion a consumer would have to set up an account with Luno, a cryptocurrency exchange, which gave consumers the option to trade in cryptocurrencies either with the promotional amount of Bitcoin or their own money.
Crypto exchange platform Coinbase also had a paid-for Facebook ad banned, which included text stating "£5 [roughly Rs. 508.83] in #Bitcoin in 2010 would be worth over £100,000 [roughly Rs. 1.01 crore] in January 2021. Don't miss out on the next decade – get started on Coinbase today."
Under the heading “coinbase”, a list of bullet points included text which stated “Simple and easy to use", "Never been hacked" and "Trusted". Under the heading “The Competition”, a list of bullet points included text which stated “Unregulated”. At the bottom of the post, text stated “Buy bitcoin in 5 minutes with as little as £25 [roughly Rs. 2,543]”.
Coinbase said that the ad did not state or imply that cryptocurrencies were an investment. It added that consumers were made aware of the relevant risks through their user agreement and had the opportunity to discover more through the "Learn" pages on their website and through their “Earn” product. It explained that through those resources they made clear that cryptocurrencies were a high-risk product.
Coinbase faced additional allegations for misleading consumers because its ad referred to its competitors as "unregulated," implying that Coinbase was regulated. ASA made a clear distinction between companies that could be regulated by the FCA and cryptocurrency services that in general are not.
Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.