The ASA has published an update this week about its scam alert programme. Consumers can tell the ASA if they see a scam ad, and the ASA will alert the National Cyber Security Centre, which can arrange to have scam ads taken down. Significantly, the ASA says that the majority of Scam Ad Alerts it has seen over the last 12 months have been for scams relating to cryptocurrency. This makes new enforcement action very timely.
It starts targeted enforcement action regarding the advertising of cryptocurrencies from 2 May. This follows on from the publication in March 2022 of an Enforcement Notice which gives guidance on cryptocurrency ads, crypto exchanges and ads or promotions which otherwise involve the transfer, sale or supply of cryptocurrencies.
CAP guidance states that when promoting cryptocurrencies – this means coins themselves (for example initial coin offerings), crypto exchanges or promotions that otherwise involve the transfer, sale or supply of cryptocurrencies – advertisers must make it expressly clear in the ad that:
- Cryptocurrencies are unregulated in the UK.
- Cryptocurrency profits may be subject to Capital Gains Tax.
- The value of investments is variable and can go down as well as up.
When designing campaigns for cryptocurrencies, advertisers should ensure you do not trivialise investing in cryptocurrency or take advantage of consumers’ inexperience or credulity. Amongst other requirements, advertisers should take care not to:
- Imply that the product or services are regulated.
- Imply that investments are safe or guaranteed, or that past performance is a guide for the future.
- Employ fear of missing out or imply that investment decisions are simple, easy or for anyone.
- Encourage people to invest using credit.
If advertisers break the rules, they are likely to face sanctions including reporting advertisers to the FCA or trading standards. It is also worth noting that stricter rules are coming. The direction of travel is that many kinds of crypto assets, including cryptocurrency, and potentially NFTs, will be brought into the scope of the Financial Promotion Regime and under the watchful eye of the FCA, which wields more power to sanction non-compliance than the ASA. The government has plans to legislate for this, while and the FCA are consulting on its own set of corresponding the new rules. Brands, advertisers and influencers looking to tap into the crypto boom will need to watch this space with care.