London-based football club Arsenal FC received a slap on the wrist from the UK advertising watchdog after it failed to warn fans of the risks associated with crypto investments in its “fan token” promos.
The Advertising Standards Authority (ASA) has upheld its decision against the Premier League club, despite an appeal, after two adverts promoting the Arsenal fan token fell short of the regulator’s standards.
The first ad, a website post published on August 6 last year, was an explainer describing the token and how it could be used within the Socios app.
The second advert was a Facebook post uploaded six days later featuring Arsenal footballers promoting the token, alongside text that briefly detailed $AFC, the Chilliz ($CHZ) cryptocurrency, and the Socios app.
The ASA found that the Facebook post didn’t make it clear that the tokens are crypto assets and omitted to mention that obtaining $AFC (publicly, as opposed to the free giveaway) required both a crypto exchange account and the purchasing of the $CHZ cryptocurrency.
Both adverts were also found to be: “misleading because they failed to illustrate the risk of the investment,” (our emphasis) and “irresponsible because they took advantage of consumers’ inexperience or credulity and trivialized engaging with and investing in crypto assets.”
“By not making clear that capital gains tax (CGT) could be payable on profits from investing in paid-for fan tokens, we concluded the ads were irresponsible and breached the Code.”
Now, the ASA has ruled that the adverts “must not appear again in the form complained about.”
The watchdog also told Arsenal:
- to make it clear that investments with paid-for fan tokens are subject to volatile markets and are unregulated crypto assets,
- not to mislead consumers by omitting material like the need to open a crypto assets exchange account and purchase various cryptocurrencies in order to buy the tokens,
- to make sure future ads are not trivialized by omitting risk warnings and taking advantage of consumers’ lack of experience with crypto.
Arsenal defended $AFC adverts
Arsenal attempted to appeal the initial complaint last year. The Premier League giant said that the warnings it provided were enough and that the target audience understood cryptocurrency and Socios thanks to its various sponsorships and partners.
The club also argued that there was no regulatory basis to include information regarding capital gains taxes incurred from trading the tokens, despite them being crypto assets and, as such, subject to such rules.
In a statement, Arsenal said: “We are disappointed by the ASA’s decision to uphold their ruling following our appeal. We have complied with the ASA’s guidance since the original ruling, and we will continue to comply in our future communications in this fast-moving area,” (via Telegraph).
It must be noted that fan tokens aren’t the same as NFTs.