Watchdog says Arsenal fan token postings broke advertising rules

Chris Vallance
Technology Reporter

Publiziert
Image source, Reuters

An Arsenal Football Club Facebook page and post promoting crypto-based fans tokens was in violation of advertising guidelines, according to a watchdog.

Advertising Standards Authority (ASA), argued, “The club failed to demonstrate the risk of an investment.”

They were told that “the advertisements must not be repeated in the complaint form.”

Arsenal stated that it will seek independent review and added that information had been provided about the financial risk.

Many top-tier clubs have fan tokens.

However, some critics and supporters of crypto tokens suggest clubs that promote cryptocurrency fan tokens encourage people to invest in the unregulated, risky world of cryptocurrency.

Consumers who aren’t familiar with the process

The ASA ruled in favor of two promotion campaigns for Arsenal’s tokens of support ($AFC).

According to the watchdog the first breach was a compromise of content on Arsenal’s official site. This included a page that had been posted 6 August 2021 and entitled ‘$AFC fan token: All you need to know.

A second breach occurred in a post by the club on Facebook on 12th August 2021. It read: “$AFC is Now Live” and asked fans to choose a song they would like to hear if we won. Get the Socios App to vote and get your token.

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The ASA ruled that three questions concerning post text and website content were relevant.

  • They were irresponsible because they used consumers’ inexperience and credulity to trivialize investment in crypto-assets.
  • They were not able to clearly show the risks involved in the investment.

It also stated that the post on Facebook “didn’t make it clear the token was a cryptocurrency-asset which could only been obtained by opening an Account and exchanging with another currency which needed to be bought”.

Both the Facebook site and post were found to be in breach of the watchdog’s rules. It stated that “The ads cannot appear again on the form complained about.”

The ruling stated that the club should make clear in the future that tokens of fan support are crypto-assets, and also “that the value invested in crypto-assets is variable and cryptoassets are unregulated”.

Communication should be ‘carefully considered’

The BBC was told by Arsenal Football Club that they take their responsibilities regarding marketing to fans seriously.

We carefully reviewed the messages to our fans about promotions, and we provided financial risk information.

Club stated that it will seek an independent review of the ASA ruling in order to gain more clarity about the current situation.

Arsenal argued that its website warned fans they could “lose some or all” of their investment when it was marketing the sport to the ASA.

According to the advertisement, it stated that they recommend spending only what you are able to afford. If necessary, seek out independent financial advice.

Club members argued that the tokens of fan were not meant as investment, and therefore they didn’t encourage trading.

Bitcoin boom

Arsenal was the first club in which fan-token marketing has been found to be violating advertising standards.

One of the clubs that has teamed up with Socios is this one. The company offers tokens to fans through their app.

Socios stated that the app has made it possible to sell coins in amounts between $270m and $300m, though he refused to say how much it pays to the clubs it partners with.

Socios responded to the recent ASA ruling by saying: “We are grateful for Arsenal’s request for an independent review. Because this is an ever-changing area, clarity is necessary to ensure that all companies adhere to the most recent guidelines.

According to clubs, collecting tokens from fans can allow them to influence club operations. This means that the more tokens collected, the greater the chance of having more control.

Fans will need to use the crypto-currency Chiliz ($CHZ), to purchase and sell tokens, with the exception that club members get non-tradeable fan tokens.

Twenty-four clubs across five European leagues have already launched fan tokens or are in the process of doing so, eight Premier League teams included.

NFTs are non-fungible tokens. Some clubs sell digital collectibles. In September, French firm Sorare, which sells football trading cards in the form of NFTs, raised $680m (£498m) in funding.

‘High-risk’

Some supporters are cautious, however. According to the Arsenal Supporters Trust, crypto-currency was an “unregulated” activity that is risky.

Tim Payton, who is also a Trust Board member, told BBC that it was wrong for clubs to exploit football’s popularity in order to sell a high-risk product.

The Trust thinks government and the authorities in football should investigate partnerships between clubs, crypto-currency firms and other organizations.

Payton stated that if the company is to survive, they must make more effort to inform all customers about any downsides to buying tokens.

Advertising Standards Authority (ASA), says that monitoring cryptocurrency-assets like Bitcoin is a priority and is worried about how many advertisements fail to adequately convey the risk of investing.

Guy Parker was the authority’s chief executive. He stated that the BBC had not been able to understand crypto-assets and they weren’t backed up by any financial compensations.

He advised consumers to “think carefully before buying.” Is your knowledge of crypto-assets sufficient? Is it possible to spend more than you can afford?

It plans to publish guidance on cryptocurrency-asset marketing within the next year and it will keep publishing rulings about ads for NFTs as well as crypto-currencies, fan tokens, in the interim.

Source: BBC.com

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