Background
Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Ad description
A website for ULEZProsperity, https://www.ulezprosperity.com/ seen in October 2024 featured the claims, “Short term, high yield returns. Capitalise on exceptional returns ranging from 21% +” and “EXAMPLE RETURNS WITH CAPITAL DEPLOYED” and listed a range of yields from 22.12% to 23.72% based on assets ranging from £20,000 to £30,000. Text also stated, “EARN STEADY INCOME AND SECURE RETURNS” and “FIXED MONTHLY INCOME”. Smaller text at the bottom of the website stated, “While capital is 100% guaranteed, returns are projected. Past performance does not guarantee future results”.
Issue
-
The complainant challenged whether the investment return claims were misleading and could be substantiated.
- The ASA challenged whether the ad complied with the requirements of the Code on financial product advertising.
Response
1. Rosenthal Capital Ltd t/a ULEZProsperity said customers rented a vehicle to ULEZProsperity for a fixed monthly return under a defined contract term of 37 months, providing a predictable income. In month 38, ULEZProsperity facilitated the vehicle disposal, but at no point did ownership transfer to ULEZProsperity during the contract term. At the end of the rental period, ULEZProsperity had first refusal to repurchase the vehicle at a pre-agreed price. Customers retained full legal ownership, which was evidenced by the vehicle’s registration document, invoices and contracts, that were issued in the customer’s name.
They said the yield figures stated on their website were substantiated by a rental yield formula widely recognised in the property sector. The calculations were based on fixed monthly rental payments over a defined term with no fluctuation. They said those figures were not speculative; they were contractually defined and therefore fully substantiated. They provided a positive customer testimonial of their service, which they said supported their assertion that they operated transparently and delivered on their commitments. They said they understood from the ASA’s guidance on substantiation that testimonials alone were not sufficient evidence to substantiate claims. However, they believed testimonials served as supporting evidence of customer experience and transparency.
They further explained that underlying their return projections was revenue they generated through six income streams, including monthly rental payments, commission from finance on the vehicles and the final disposal of vehicles, where at the end of the contract term (38 months), the asset was either resold or refinanced. Given that ULEZProsperity operated with six income streams per asset and minimal liabilities, the model was self-sustaining and robust.
2. ULEZProsperity said they did not offer a financial product that was regulated by the Financial Conduct Authority (FCA). They said their business model did not involve collective investment schemes, financial instruments or lending services. Instead, the model operated as a straightforward asset purchase and rental agreement, which was not a type of regulated financial promotion.
They said that the rental payments made to investors were fixed and outlined in a legally binding agreement. Projections were only referenced when discussing potential future returns beyond the fixed rental term. They said they had maintained a 100% repayment record, with no complaints from clients regarding non-payment of rental income and that the contractual nature of the payments was fundamental to their business model and differentiated them from speculative investments.
Nevertheless, to ensure clarity, they said that explanatory text could be included to explicitly state that the product was not a financial product or a regulated investment.
Assessment
1. Upheld
The CAP Code stated that marketing communications must not materially mislead or be likely to do so and that before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers were likely to regard as objective and that were capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation.
The ad stated, “Capitalise on exceptional returns ranging from 21% +” and listed a range of yields from 22.12% to 23.72% based on assets ranging from £20,000 to £30,000. We considered that consumers would understand the ad to mean that, by purchasing and then renting a vehicle to ULEZProsperity, they could expect to achieve returns from 21% to 23.72%. We noted ULEZProsperity’s comment that the return figures were based on fixed monthly rental payments over a defined term, with no fluctuation, and that they were contractually defined and therefore fully substantiated. However, the only substantiation ULEZProsperity provided to substantiate the return claims was a customer testimonial and we did not consider that customer endorsements alone constituted adequate substantiation. ULEZProsperity therefore did not provide sufficient evidence to support their investment returns claims and we concluded that the claims were misleading and had not been substantiated.
On that point, the ad breached CAP Code (Edition 12) rules 3.1 (Misleading advertising) and 3.7 (Substantiation).
2. Upheld
The CAP Code required offers of financial products to be set out in a way that allowed them to be understood easily by the audience being addressed. Marketers were required to ensure that they did not take advantage of consumers’ inexperience or credulity. In addition, the basis used to calculate any rate of interest, forecast or projection should be apparent immediately. Marketing communications were also required to make clear that the value of investments was variable and, unless guaranteed, could go down as well as up. If the value of the investment was guaranteed, the marketing communication should explain the guarantee.
We acknowledged ULEZProsperity’s comments that they did not offer a financial product that was regulated by the FCA and that their product operated as an asset purchase and rental agreement, which they understood did not constitute a regulated financial promotion. However, the focus of the ad was on promoting a buy to let arrangement for cars that we considered was likely to be understood by consumers as a type of investment. Therefore, the ad promoted a financial product.
We understood specifically that consumers bought a ULEZ-compliant car from ULEZProsperity, and the consumer retained full ownership of the car. The consumer then rented the car out via ULEZProsperity to key workers to earn a fixed, monthly income that they said was guaranteed. We also understood that the rental period was usually 37 months and at the end of the contract the consumer sold the car to ULEZProsperity for a pre-arranged price. While it was usual to sell the car at 37 months, there was also the option to continue renting the vehicle out, but the income after 37 months was not guaranteed. The ad made references to “secure returns”, “fixed monthly income” and how “capital is 100% guaranteed”. However, we considered that the guarantee, which they told us was limited to rental income up to 38 months and the sale of the car, was not explained or made clear on the website.
We acknowledged ULEZProsperity’s comment that projections were only referenced when discussing potential future returns beyond the usual fixed rental term and we noted that the website featured a risk warning at the bottom of the website which stated, “While capital is 100% guaranteed, returns are projected. Past performance does not guarantee future results”. However, we considered it was not clear that the warning referred only to rental income generated after 37 months and that the risk warning was in any case not displayed prominently on the website.
Further, the website featured the claims “Capitalise on exceptional returns ranging from 21% +”, “EXAMPLE RETURNS WITH CAPITAL DEPLOYED” and listed a range of yields from 22.12% to 23.72% based on assets ranging from £20,000 to £30,000. However, it was not clear how those returns or yields had been calculated.
Therefore, the website promoted a financial product but was not set out in a way that allowed it to be understood easily by the audience being addressed. In addition, the basis used to calculate any rate of interest, forecast or projection was not immediately apparent. Finally, because the value of investments was variable after 37 months, but the only risk warning on the website that highlighted that was not prominent, and it was unclear it related only to the rental income after 37 months, the ad breached the Code.
On that point, the ad breached CAP Code (Edition 12) rules 3.1 (Misleading advertising) and 14.1, 14.3 and 14.4 (Financial products).
Action
The ad must not appear again in the form complained of. We told Rosenthal Capital Ltd t/a ULEZProsperity to ensure that their future ads did not quote returns unless they held adequate evidence to substantiate the claims and that their ads were set out in a way that allowed them to be understood easily by the audience being addressed. We also told them to ensure the basis used to calculate any rate of interest, forecast or projection was apparent immediately and to make clear that the value of investments was variable and, unless guaranteed, could go down as well as up and that if the value of the investment was guaranteed, the marketing communication must explain the guarantee.
