A trio of companies offering land investments have been caught out and had their adverts banned in a clampdown by the Advertising Standards Authority.
The watchdog used artificial intelligence to search for ads online which break its rules, as part of a project on land and property investments.
In all three cases it challenged whether the ads were misleading because they failed to illustrate the risks of the investments.
The cases were against Luxury Lodges, Land Profits and Connect UK Sales.
Six figure profits claims
The ASA considered two paid-for Facebook ads and a website for Land Profits, a land development and mentorship company seen in August 2024.
The firm offered training for investors seeking to buy and sell land for property development.
The two adverts featured the claim: “You are only one land deal away from six-figure profits”.
While the website 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.”
The body said the three ads should not appear again in the form they did in the summer.
Misleading ‘guaranteed returns’ promise
A magazine ad for Luxury Lodges, a holiday property investment company, was seen in July 2024 and offered “guaranteed returns” for investing in luxury residents across five-star resorts in the UK.
A complaint relating to this advert challenged whether the claim “up to £83,454 over two years guaranteed return” was misleading, because the return was based on historical success, which was not therefore guaranteed.
Luxury Lodges argued that because the advertised risk was guaranteed a return warning was not necessary.
It also said the ad made no reference to any increase in the capital value of a lodge, or its eventual sale, just to a fixed sublet return over an ongoing two-year period.
However, the ASA concluded it was not clear enough that the quoted return related to the rental income from the sublet scheme.
It said: “We acknowledged that the quoted figure related to rental income and that it was guaranteed for a maximum two-year period. We considered that the ad did not make the nature of the guarantee clear.
“In addition, 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.”
The company was told to ensure future ads made clear the value of investments was variable and told them to make the nature of the guarantee clear. It was also told to ensure future ads included non-optional fees and charges that applied to all or most buyers.
‘Exclusive’ land auction investments
A paid-for Facebook ad from Connect UK Sales promoted “exclusive” land auction investment opportunities, while its website promised selling land at auction can achieve more than with a local estate agent, with a 10-30 per cent return on investment.
The firm said the advert was addressed to people who already owned or were ready to purchase a parcel of land.
However, the ASA said the ad did not provide qualifying information about the return on investment claims. And although Connect UK provided the authority with case studies it said because these only related to two examples, one of which was several years old, it did not provide enough evidence to support the claim.
For these reasons, the ASA ruled against both the advert and website landing page and told the company to ensure future ads made clear investments were variable and also to ensure they held evidence to substantiate investment claims.
tara.o’connor@ft.com
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