1st December 2023

Whisky investment ads misled

People are being urged to avoid misleading adverts for ‘whisky investment’ schemes, following a recent ruling by the ASA.

By JTS Staff
Journal of Trading Standards' in-house team
We would encourage everyone to stay vigilant and to not be sucked in – especially if adverts guarantee you will get year-on-year returns

Misleading social media adverts for whisky investments have caught the attention of City of London Police and City of London Corporation Trading Standards, who are urging the public to beware of being duped.

The adverts encourage people to invest in casks of whisky on the premise that the value will increase over time. Adverts for Blackford Casks Ltd, trading as Whisky Investment Partners, have now been ruled by the Advertising Standards Authority (ASA) to be misleading and in breach of the CAP code.

The City of London Corporation’s Port Health and Environmental Services Committee oversees the Square Mile’s Trading Standards operations. Its Chair, Mary Durcan, said: “City Corporation Trading Standards team has serious concerns over the whisky investment schemes that have sprung up over the last couple of years.

“Casks are being sold as a long-term investment because whisky takes time to mature in the cask, consumers are being told. This means that it could be several years before investors realise their investments aren’t performing.

“It is vitally important to remember that whisky investments are not regulated by the Financial Conduct Authority, which means that there is no recourse to the Financial Services Compensation Scheme if anything goes wrong.”

One of the adverts found to be misleading by the ASA stated: “Historically, Scotch Whisky has delivered average returns of between 8-12% a year. As Roger’s case has shown, it can be considerably more! While individual distilleries vary, the major deciding factor in the size of your return is time. As Whisky matures, it becomes more desirable and therefore more valuable”.

The ASA investigation found that the risks of investing in whisky casks were not highlighted in advertisements, with some claiming it could fund early retirement. The terms and conditions provided in some advertisements also didn’t state that fees would be incurred, meaning that some investors were stung with a charge later down the line.

The ASA determined that although no fraudulent activity had been committed by Blackford Casks Ltd, the ads needed to be revised and not to quote average returns without adequate evidence. The watchdog ruled that the adverts were not easy to understand and took advantage of consumers’ lack of experience and credulity.

According to Detective Inspector Nichola Meghji from the Fraud Operations team at the City of London Police, “As we approach the run-up to Christmas, we would like to remind people of the potential risks associated with investment opportunities, especially around whisky.

“Much like gin, the interest in micro-breweries and independent distilleries has grown exponentially over the last decade as the British consumer has become more interested in home grown spirits versus imported beers and wine.

“An investment in a cask of whisky may seem like a wise choice, and perfect as a Christmas present to some, but we would encourage everyone to stay vigilant and to not be sucked in – especially if adverts guarantee you will get year-on-year returns. Certain companies prey on people’s lack of knowledge around investing, which is then exploited at a great cost to the consumer.”

In 2023, there were 89 reports made to Action Fraud about alcohol investments, with losses totalling more than £3m.

City of London Police and Trading Standards are advising the public:

  • Take your time considering investment opportunities: don’t be rushed into making an investment. Remember, legitimate organisations will never pressure you into investing on the spot.
  • Seek advice first: before making significant financial decisions, speak with trusted friends or family members, or seek professional independent advice.
  • Use the Financial Conduct Authority’s (FCA) register to check if the company is regulated by the FCA. If you deal with a firm (or individual) that isn’t regulated, you may not be covered by the Financial Ombudsman Service (FOS) if things go wrong and you lose your money.
  • Lastly, if you aren’t an expert in a certain field of investment, or feel that you don’t know enough of the markets, then it’s probably best not to invest. If it sounds too good to be true, then it probably is.

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