Bitcoin firm battered for trying to hoodwink pensioners

bitcoinA cryptocurrency specialist which ran a press campaign to try to persuade pensioners to invest in Bitcoin has been spanked by the ad watchdog for irresponsibly promoting investments to people who were unlikely to know much about the topic.

Coinfloor, which uses the strapline “Bitcoin made easy”, ran the ad in the Northamptonshire Telegraph entitled “There is no point in keeping your money in the bank…” It featured an image and the name of a woman, described as aged 63, and text stated “More and more people are waking up to the savings power of Bitcoin…”

It went on to quote the woman, who said: “I come from a generation of savers, not spenders. Today there is no point keeping it in the bank – the interest rates are insulting. That is why when I received my pension, I put a third of it into gold, a third of it into silver and the remainder into Bitcoin… To me, Bitcoin is digital gold and it has allowed me to take the steps to secure the cash I already have…

“Thanks to Coinfloor’s Autobuy service, buying and holding Bitcoin has never been easier – there was just a simple sign-up process and then I could buy Bitcoin automatically straight from my bank account. Use Coinfloor to help you build your Bitcoin Savings portfolio.”

Small print at the bottom of the ad stated “Investing in cryptocurrencies involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose.”

One complainant, who believed the ad targeted retirees, challenged the Advertising Standards Authority whether it was misleading, because it failed to make clear the risks associated with Bitcoin investments, including loss of capital. The complainant also believed the ad was socially irresponsible, because it suggested that purchasing Bitcoin was a good or secure way to invest one’s savings or pension.

In its defence, Coinfloor said the ad represented the perspective of a customer rather than the company’s own view. Coinfloor insisted there was no suggestion in the ad that the customer’s actions constituted a wise or secure investment, and that neither Coinfloor nor the customer had claimed that investors would make money by investing in Bitcoin, or recommended consumers should invest in Bitcoin.

The company also pointed to the disclaimer – which it insisted was given sufficient prominence – had mentioned that investing in cryptocurrencies involved significant risk and could result in losses.

However, following its investigation, the ASA considered the disclaimer was insufficient to counteract the overall message of the ad, and, given the font size and its positioning, it had not been presented clearly or prominently enough to ensure consumers were made aware of the risk of loss of capital.

With the ad appearing in a regional newspaper targeted to a general readership, the watchdog also considered the audience was unlikely to have extensive financial knowledge and experience on the nature of cryptocurrencies, and may expect that the exchange of Bitcoin would be regulated, with legal protection in place for investment activities.

But neither Coinfloor nor the general Bitcoin market were 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.

The ad directly compared investing savings in Bitcoin with the use of regulated services, discouraging consumers from placing their money in banks. Particularly in light of that context, the ASA considered the fact that Coinfloor and the Bitcoin market were unregulated to be material information that consumers required in order to make informed decisions about Coinfloor’s product, and should have been made clear in the ad.

Ultimately, the ASA ruled the ad was misleading because it had not made sufficiently clear that the value of Bitcoin could go down as well as up, or that the Bitcoin market was unregulated in the UK.

Banning the ad from appearing again in its current form, the regulator warned Coinfloor to ensure that future marketing communications were in line with the ad code.

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