TransferWise caught out 'misleading' customers about how cheap it is compared to banks

TransferWise founders Kristo Kaarmann and Taavet HinrikusTransferWiseTransferWise founders Kristo Kaarmann, left, and Taavet Hinrikus.

TransferWise has reprimanded by the UK advertising regulator for misleading customers on how much they can save on its platform, according to the UK advertising regulator.

The London fintech startup, which allows people to transfer money overseas, claimed on its website last August that its platform allowed people to save 90% when they transferred money abroad, compared to banks, but the (Advertising Standards Authority) ASA ruled on Wednesday that the figure could not be substantiated.

TransferWise also featured a currency converter calculator on its website but the ASA said the quotes this calculator provided were misleading.

The advertising watchdog also ruled that the comparative savings claims on TransferWise’s website could not be verified.

TransferWise AdASAThe ASA ruled TransferWise was misleading consumers because the ‘save up to 90%’ claim could not be substantiated.

In its defence, TransferWise said it regularly commissioned an independent third party to conduct “mystery shopping exercises” to compare competitors’ costs of transferring foreign currency with the cost of TransferWise’s service.

TransferWise said the results of those mystery shopping exercises formed the basis of the claims “You’re saving £xx” and “you save up to 90%”.

But the regulator wasn’t convinced and ruled that the ad must not appear again in its current form. The ASA also told TransferWise not to make comparative savings claims against banks unless they have “adequate substantiation for them” and make sure those claims are verifiable in the future.

In its ruling, the ASA wrote:

The ASA considered the claim “You’re saving £xx” was an absolute claim and consumers would interpret it to mean they would save exactly the amount shown. We also considered that impression was enhanced due to the presentation of the claim in the currency converter calculator and the fact that the results varied according to the amount and currencies inputted into the calculator.

We considered the results of the mystery shopping exercise. We noted that for a transfer of £1,000 into Euros, the average saving was almost 90%. However, we noted that for all of the other transfers, except two, the average savings were less than 90%. We understood that TransferWise extrapolated the 90% saving (derived from the £1,000 into Euros scenario) to all other transfers, whatever the currencies and amounts involved, and we considered that the savings shown in the calculator were therefore artificial and based on a different scenario, rather than the actual saving a consumer would achieve for that transaction.

Because consumers would not achieve a saving of exactly the amount shown, we considered that the claim “You’re saving £xx” had not been substantiated and we concluded that it was misleading.

NOW WATCH: A tech company made a new type of solar panel that’s about to turn the energy industry upside down

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at