Protecting Consumers: South Africa Introduces New Crypto Ad Rules
• South Africa has added a new clause to its advertising code, specifically for cryptocurrency products and services
• Adverts must clearly state that investments may result in losses and must not contradict warnings about potential losses
• Rates of returns and projections must be adequately substantiated, with past performance not being used to promise future performance or returns
South Africa’s Advertising Regulatory Board (ARB) has recently taken steps to protect consumers by including a new clause in Section III of the country’s advertising code, specifically pertaining to the provision of cryptocurrency products and services. This clause establishes certain standards which must be followed by companies and individuals when advertising these services and products.
Firstly, adverts, including those for cryptocurrency offerings, must include a clear statement that investments may result in the loss of capital, as the value of cryptocurrency is variable and can go up as well as down. Warnings about potential investment losses must not be contradicted. It is also important that information is presented in an ‘easily understandable’ manner for intended audiences.
When advertising particular services and products, companies and individuals must provide balanced messages about returns, features, benefits and risks associated with them. Rates of returns, projections or forecasts must be adequately substantiated, including how these are calculated and what conditions apply to touted returns. It is important to note that past performance should not be used to promise future performance or returns, and should not be presented in a way that creates a favourable impression of the product or service.
Adverts from cryptocurrency service providers that are not registered credit providers should also include a prominent disclosure that the product is not a registered credit product. Any adverts which contain false, misleading or deceptive claims are prohibited, as is any advertising which is presented in a way to encourage reckless or irresponsible practices.
The ARB is committed to ensuring that consumers are adequately protected from unethical advertising, and these new standards will help to ensure that this is the case. By clearly stating the risks associated with cryptocurrency investments and providing balanced information about products and services, South African consumers can make informed decisions.