ASA slams Arsenal Football Club for crypto ad
One week after the UK Advertising Standards Authority (ASA) slammed several crypto ads, including ones by eToro and Coinbase, the body has once again taken aim at cryptocurrency advertising. Today, ASA issued a decision against Arsenal Football Club for two advertising pieces that were found to be irresponsible because they took advantage of consumers’ inexperience or credulity and trivialised investment in cryptoassets.
ASA reviewed a Facebook post and website for Arsenal Football Club:
- a. The post on Arsenal’s Facebook page, posted on 12 August 2021, included text that stated “$AFC in now live $CHZ” and “Ben White, Calum Chambers and Kieran Tierney have had their say … But what song do you want to hear when we win? Download the Socios app to get your token and vote”. The ad included a video featuring Ben White, Calum Chambers and Kieran Tierney.
- b. The website included a web page published on 6 August 2021 with the title “$AFC Fan Token: Everything you need to know” and included information explaining what the Arsenal Fan Token was and the benefits that it offered. The page included text at the bottom that stated “In order to buy $AFC fan tokens you need to purchase the cryptocurrency Chiliz. Please remember that the future value of Fan Tokens is dependent on supply and demand, and can therefore go up as well as down. Fans should be aware that they could lose some or all of their money invested. We advise you to spend only what you can afford and seek independent financial advice if required.”
The ASA challenged whether:
- ads (a) and (b) were irresponsible because they took advantage of consumers’ inexperience or credulity and trivialised investment in cryptoassets;
- ads (a) and (b) were misleading because they failed to illustrate the risk of the investment; and
-
ad (a) was misleading because it did not make clear the “token” was a cryptoasset, which could only be obtained by opening an account and exchanging with another cryptocurrency which had to be purchased.
Guidance published by the UK Financial Conduct Authority (FCA) stated that utility tokens could be redeemed for access to a specific product or service and therefore differed from other unregulated cryptoassets such as Bitcoin, which were primarily used as a means of exchange. However, they were nevertheless categorised by the FCA as cryptoassets, as were cryptocurrencies, and as such the ASA considered they could be used as a form of investment, regardless of how they were promoted.
In addition while ASA noted Arsenal’s comment that the trading facility for Socios was not available when the ads were published, thereby preventing consumers trading Fan Tokens for six weeks, the ads had continued to remain live, when trading on Socios was available and had been for a number of months.
ASA understood that cryptoassets were a complex and sophisticated investment, subject to frequent change in value and one that could potentially lead to large losses. ASA considered the decision to open a cryptoasset exchange account, with the potential to engage with and invest in such a financial product, was one that required careful thought and consideration.
The Authority noted that Arsenal members would receive one free Fan Token. However, to use this token a consumer had to sign up for the Socios account and this would give users the potential to buy and trade more tokens in the future.
ASA considered the advertising of the Fan Token as a way to influence the song played when Arsenal won a match. The promotion of free Fan Tokens, which still needed the user to sign up to a Socios account, to sell a cryptoasset product or sign up for a cryptoasset service, encouraged consumers to engage in such a high risk investment without consideration and trivialised what was a serious and potentially costly financial decision.
Further, ASA noted that the cryptoasset product offered by Arsenal in the ad was not regulated by the FCA and therefore not subject to the FCA’s financial promotions rules. The body also considered that consumers would be less likely to be familiar with cryptocurrencies than with other well-established regulated investments such as ISAs or shares. Therefore, most consumers were unlikely to be aware that CGT had to be paid on profits in excess of the annual CGT allowance from investing in cryptoassets, in the same way they would for more traditional investments.
ASA acknowledged that the ads did not promote the Fan Tokens as an investment or financial product. However, the product was a cryptoasset regardless of how it was promoted and the ads did not contain any information that CGT could be payable on profits from investing in cryptoassets. ASA therefore considered the potential tax implications were not made sufficiently clear to consumers considering investing in it.
Therefore, because the ads trivialised investment in cryptoassets and took advantage of consumers’ inexperience or credulity by not making clear that CGT could be payable on profits from investing, the Authority concluded the ads were irresponsible and breached the Code.
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. ASA understood that Fan Tokens were a cryptoasset and could be used as an investment, even if not marketed as a product that could generate a return. ASA considered that cryptoassets were a volatile investment, subject to frequent change and one that could potentially lead to large losses.
The ads appeared on the Arsenal website and Facebook page and were therefore likely to have been seen by a general audience including consumers who did not have financial knowledge and experience of cryptoassets.
ASA considered consumers would expect that the exchange of cryptoassets would be regulated, with legal protection in place for investment activities. The Authority understood, however, that cryptoasset services in general were not 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.
ASA acknowledged that ad (a) was posted a week after ad (b), which contained some information about Chiliz being a cryptocurrency and the risks involved. However, there was no guarantee that Facebook users had previously engaged with ab (b), and ad (a) itself had no warning about the risks of cryptoassets.
In addition, the risk warning was at the bottom of ad (b) and ASA considered it was possible for consumers to engage further without seeing it. Further, ASA noted the warning did not make consumers aware that cryptoassets were unregulated in the UK. Therefore, because ad (a) did not include any risk warning making consumers aware that cryptoassets were unregulated in the UK and cryptoassets could go down as well as up. Also, because the risk warning in ad (b) was not prominent and did not state cryptoassets were unregulated in the UK, ASA concluded the ads were misleading.
Ad (a) only referred to the Fan Token as a “token”, included no risk warning about cryptoassets and did not mention that Fan Tokens were a cryptoasset or that to buy them you had to first purchase another cryptocurrency, Chiliz. ASA therefore considered consumers were unlikely to understand that the ad referred to cryptoassets.
ASA acknowledged that the Socios app explained that to purchase Fan Tokens it was necessary to buy the cryptocurrency Chiliz. However, while the ad linked to the Socios log-in page and this had no immediate information about cryptoassets.
ASA considered that Fan Tokens were a cryptoasset which had to be bought by purchasing another cryptocurrency and that would be material information that consumers needed to make an informed decision to enquire further. Because ad (a) did not include material information that Fan Tokens were a cryptoasset that had to be exchanged with another cryptocurrency, ASA concluded the ad was misleading.
The ads must not appear again in the form complained about. ASA told Arsenal Football Club PLC to ensure that their future ads did not trivialise investment in cryptoassets and did not irresponsibly take advantage of consumers’ lack of experience or credulity by not making clear that CGT could be due on cryptoasset profits.
Finally, ASA told Arsenal FC to ensure that they made sufficiently clear that the value of investments in cryptoassets was variable and cryptoassets were unregulated. The Authority also told them to ensure that they did not mislead consumers by omitting material information in their ads, including that Fan Tokens were a cryptoasset that had to be bought using another cryptocurrency.