The UK Advertising Standards Authority (ASA) today issued a ruling against Skrill Ltd for a piece of advertising involving cryptocurrencies that was found to be misleading.

The ad in question is a paid-for Reddit ad for Skrill, an online wallet and money transfer service, seen on 31 July 2021. The ad included text which stated “Want to try making a profit on crypto without risking your money? Sign up now and give crypto a go, for free. If the value goes up the profits are yours to keep.* *Profits capped at £25”.

The ad also included a video which contained text that stated “Want to try crypto risk-free?” and “Join Skrill. Try crypto. Risk nothing”.

1. The complainant challenged whether the promotion was irresponsible because it took advantage of consumers’ inexperience or credulity.
2. The ASA challenged whether the ad was misleading because it failed to illustrate the risk of investing in cryptocurrencies.

The ASA acknowledged that for the purpose of the promotion, users were allocated a notional balance in the cryptocurrency of their choice. Therefore, consumers would neither own cryptocurrency nor be exposed to the risks that came with the investment in cryptocurrencies. However, the ASA understood that to participate in the promotion a user would have had to open a Skrill account. Any potential profit would have been credited to that account, which would provide them with the ability to trade in cryptocurrency.

Notwithstanding that the promotion did not require participants to purchase cryptocurrency directly, the ASA considered the impression provided by those references suggested that investing in cryptocurrency was simple and conventional, and could be done without risk.

The ASA noted that Skrill offered a range of electronic money services, separate from purchasing cryptocurrency, where any potential earnings from the promotion could be used. Nevertheless the promotion was about the potential to make gains on cryptocurrency and any profit was paid into an account that had the option to be used for investing in cryptocurrency.

Further, the ASA considered the decision to open an account, with the potential to invest in such a financial product and which would expose participants to that risk, was one that required careful thought and consideration. The Authority considered that the impression given by the ad, that investing in cryptocurrency was simple and conventional, and which did not offer any immediate warnings in the ad about the overall risk of cryptocurrency investment itself, encouraged consumers to engage in a high risk investment without consideration and took advantage of their inexperience and credulity.

Because the promotion took advantage of consumers’ inexperience or credulity, the ASA concluded it was irresponsible and breached the Code.

In addition, the ASA notes that 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 promotion was focused on investing and profiting from a hypothecated cryptocurrency investment, and if consumers made a profit due to the value of the chosen cryptocurrency increasing, that would likely suggest that they could make a profit by investing in a cryptocurrency for real. Although users were not using actual cryptocurrency during the promotion, it served as an introduction to investing in cryptocurrency, and the ASA considered that the ad was a marketing communication for an investment for that reason.

Furthermore, any money made through the promotion was paid into a Skrill account that offered the user the option to buy cryptocurrency.

The ASA considered that the audience was unlikely to have extensive financial knowledge and experience of cryptocurrencies and would expect that the exchange of cryptocurrencies would be regulated, with legal protection in place for investment activities.

However, the Authority understood that cryptocurrency in general was not regulated in the UK and was not subject to the protections afforded by the Financial Services Compensation Scheme or the Financial Ombudsman Service. Because the promotion required users to open a Skrill account and any profit would have been paid into that account, it meant consumers had the opportunity to invest in cryptocurrency and would have been exposed to the risks of cryptocurrency.

The ASA considered the fact that cryptocurrency was unregulated to be material information that consumers required in order to make an informed decision about participating in the promotion, and should have been made clear in the ad. Therefore, because the ad did not include any risk warning making consumers aware that cryptocurrency could go down as well as up, or that cryptocurrency was unregulated in the UK, the ASA concluded that the ad was misleading.

The ad must not appear again in the form complained about. The Authority told Skrill Ltd to ensure that they did not irresponsibly take advantage of consumers’ lack of experience or credulity by implying that cryptocurrency investment was risk free. The ASA also told Skrill to ensure that their future ads made sufficiently clear that the value of investments in cryptocurrency was variable and could go down as well as up and that cryptocurrency was unregulated.