Background
Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Ad description
A national press ad for Stanley Gibbons stamp investment opportunities was headed ""The value of your investments can go down." Strangely enough, this one just keeps going up". Further text stated "We do not suggest rare stamps and other prestige collectibles could never go down in value. It's just that their value has risen steadily since people first started investing in them. A rare proposition. As specialists in that market, we now offer you a unique proposition - a rare investment indeed. One that is more than likely to protect the value of your investment in rare stamps and coins, safeguarding your capital as other markets continue to fluctuate whilst also allowing you maximum growth and a healthy return. Why such confidence? Because the asset class underpinning your investment, rare stamps, has returned investors over 10% a year on average for the last 40 years(1). In fact, uncorrelated with other mainstream assets, investment-grade stamps have a long, strong, historical record of growth that can help you diversify your portfolio. During previous periods of economic chaos there have been obvious places of refuge. Gilts. Cash. Commodities like silver or gold. Today it is hard to see how any of these will even keep pace with inflation. So, where can you turn? May we suggest that at the very least you look into an investment that has consistently offered steady returns, no matter what is happening to the markets - rare stamps, rare coins and other prestige collectibles. We don't suggest you shift your entire portfolio into rare stamps. But as an anchor for part of your portfolio, doesn't it make a lot of sense? To find out more, download your free guide at stanleygibbons.com/DBTEL". A stamp and a coin were pictured with "Sold" prices underneath from 2004 and 2012.
Small print included "1. As per the Bloomberg-listed GB30 Rarities Index (STGIGB30). According to an independent academic study by Dimson & Spaenjers in 2009 the value of the rare stamp market has never dropped in value. The stamp and coin shown here are for illustrative purposes only and do not necessarily indicate returns expected from the investment".
Issue
The complainant challenged whether the following claims were misleading and could be substantiated:
1. "Strangely enough, this one keeps going up", "their value has risen steadily since people first started investing in them" and "consistently offered steady returns"; and
2. that rare stamps had "returned investors over 10% a year on average for the last 40 years".
Response
1. Stanley Gibbons Ltd said that stamps were first issued in 1840 and that Stanley Gibbons the person had started business in 1856, and from that time certain rare stamps had a value above that for their postal usage. They provided a spreadsheet showing the performance of the GB30 Rare Stamp Index from 1899 to 2012. They pointed to the mint 2d Blue which was shown on the index as costing £80 in 1954 and was now valued at £35,000. They said the total value of the index had risen from £8920 in 1954 to £1,775,500 in 2012. They did not believe the claims to be misleading, unsubstantiated or exaggerated. They said they could supply the catalogues from which the prices were extracted if required. They provided some recent quotes on the reliability of their catalogue prices from philatelists and stamp professionals.
They said that, on re-reading the Dimson & Spaenjers report, the statement in the ad that "According to an independent academic study by Dimson & Spaenjers in 2009 the value of the rare stamp market has never dropped in value" was not an entirely accurate reflection of the report's position. They said they would reword any reference to the report in future ads to reflect this. They also said that the agency who prepared the ad had missed out the wording "the value of your investments can go down as well as up", which they said they used as standard wording in ads for these products. They said they would make every effort to ensure it was included in future.
2. Stanley Gibbons referred to the GB30 Rare Stamp Index spreadsheet. They said that the totals for 1973 to 2012 (40 years) showed that the average return was 10.6% per annum over that period and therefore the claim had been substantiated. They said their investment products, and ads for them, referred to rare and high quality items and not to stamps in general. They said that lower grade stamps did suffer a price correction in late 1970s/early 1980s, but that their ad was not for that grade of stamps. They said they were acknowledged as a world leading authority on stamps, and that the STGIGB30 Rare Stamp Index was first launched in 2004. They said the index was compiled in conjunction with Bloomberg, who regularly verified the accuracy of the information, and that it was published on the Bloomberg Professional service which was used by professional investors. They said it was accepted as industry standard. They said there were many ways of buying and selling stamps and that the ad did not refer to auction prices and they were therefore irrelevant. They provided a spreadsheet covering the period 2010 to the present that gave examples of investment clients who had sold their stamps at Stanley Gibbons catalogue prices or above.
Assessment
1. Upheld
The ad contained various claims that the value of stamps had consistently increased "since people first started investing in them". In the context of the ad, the ASA considered consumers would understand the claims related to rarer or higher-grade stamps that would be more likely to increase in value. Stanley Gibbons said that certain stamps had increased in value from as early as the 1850s, although the spreadsheet they supplied only covered the period 1899 to 2012. We also understood that the prices in the spreadsheet were extracted from their catalogue only and therefore considered they were not sufficient to demonstrate that investors were able to sell their stamps at those prices. Stanley Gibbons had not provided us with a copy of the Dimson & Spaenjers report, but they had conceded that the reference to it in the ad was not an entirely accurate reflection of the report's position. We also considered the ad did not make sufficiently clear that past performance did not necessarily give a guide for the future, as required by the Code. We did not consider that the evidence provided was sufficient to substantiate the claims "Strangely enough, this one keeps going up", "their value has risen steadily since people first started investing in them" and "consistently offered steady returns" and therefore concluded the ad was misleading.
On this point the ad breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation), 3.11 3.11 Marketing communications must not mislead consumers by exaggerating the capability or performance of a product. (Exaggeration) and 14.4 14.4 Marketing communications must make clear that the value of investments is variable and, unless guaranteed, can go down as well as up. If the value of the investment is guaranteed, the marketing communication must explain the guarantee. and 14.5 14.5 Marketing communications should make clear that past performance or experience does not necessarily give a guide for the future; if they are used in marketing communications, examples of past performance or experience should not be unrepresentative. (Financial products).
2. Upheld
Stanley Gibbons supplied a spreadsheet of their prices covering the period 1899 to 2012. However, we understood that the prices were extracted from their catalogue only and therefore considered they were not sufficient to demonstrate that investors were able to sell their stamps at those prices by any method. We were provided with some examples of sales by investment clients at the catalogue prices or higher in the period 2010 to the present. However, we did not consider that evidence covering only that period was sufficient to support the claim which referred to "the last 40 years". We were also not provided with information regarding the sales method or evidence that the prices achieved were generally reflective of returns. We therefore concluded that the claim that rare stamps had "returned investors over 10% a year on average for the last 40 years" had not been substantiated.
On this point the ad breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation), 3.11 3.11 Marketing communications must not mislead consumers by exaggerating the capability or performance of a product. (Exaggeration) and 14.4 14.4 Marketing communications must make clear that the value of investments is variable and, unless guaranteed, can go down as well as up. If the value of the investment is guaranteed, the marketing communication must explain the guarantee. and 14.5 14.5 Marketing communications should make clear that past performance or experience does not necessarily give a guide for the future; if they are used in marketing communications, examples of past performance or experience should not be unrepresentative. (Financial products).
Action
The ad must not appear again in its current form. We told Stanley Gibbons not to claim that the value of investment stamps had consistently increased or to state average returns unless they held robust evidence to support such claims.
