The Advertising Standards Authority (ASA) has banned three property investments advertisements for unclear risk representations.
Adverts from Luxury Lodges, Land Profit and Connect UK Sale were flagged for investigation after ASA used its Active Ad Monitoring System, which uses AI to proactively search for online ads that potentially violate rules.
Connect UK’s Land Auctions website and paid-for Facebook advert stated “Calling all Property & Land Investors. Get Exclusive Land Auction Investment Opportunities with 10-30% ROI […] Join Our Investor Mailing List Exclusive land auction investment opportunities sent directly to your inbox!”
However, the regulator claimed that the statement was misleading because it failed to illustrate the risk of the investment.
Additionally, the website landing page included the claim “When selling land at auction you can actually achieve more than you would with a local estate agent.”
ASA upheld that: “Because the ad did not make clear that the value of investments was variable and could go down as well as up, we concluded that it was misleading and breached the Code.”
Connect UK responded by claiming the company was unaware of the need to insert a disclaimer that illustrated the risk of the investment.
Meanwhile, a magazine advertisement for Luxury Lodges was also flagged by ASA’s AI detection.
Within the magazine ad, the company offered “guaranteed returns,” however the complaint challenged whether this claim was misleading, as it was based on historical success.
Luxury Lodges argued that a return warning was not necessary because the advertised risk was guaranteed, however, the ASA concluded that the ad was not clear enough.
“The ad did not make clear that the value of the property investment itself was variable and could go down as well as up,
“We considered that the reference to historical success would be seen as giving a guide to future returns,” said ASA.
Thirdly, Land Profits featured the claim: “You are only one land deal away from six-figure profits,” in two adverts.
The company’s website also featured testimonials and videos titled ‘client results’ which referred to financial freedom and “securing your future”.
The ASA said: “Because the ads did not make clear that investments could go down as well as up, or that past performance did not necessarily give a guide for the future, and because we had not seen evidence to show that the examples of past performance were representative, we concluded that they were misleading.”