The TV ad, created by The Creative Partnership, promotes LoveFilm's subscriber services, which include streaming movies online, watching them through internet-enabled TV, or receiving DVDs and Blue-Ray discs by post.
The ad's voiceover says "All this from just £5.99 a month. You can even try it for free," while on-screen text explains "for your 2-week free trial Lovefilm.com," and small text concludes "subject to compatibility".
LoveFilm, in defence, said that since launching its digital streaming service in May 2009 it had tried to include digital streaming within its rental packages wherever possible.
It was not permitted to make some films available in a subscription package, and some were only available on a pay-per-view basis to members. LoveFilm said this made them a different kind of product that could not be received as part of a subscription.
It argued that this distinction was clearly explained on its website and disagreed the TV ad was misleading.
The ASA noted that the ad was to promote its subscription service only and without a qualification that make clear restrictions clear, viewers were likely to infer that full use of LoveFilm's services, including watching movies online, were included in the two-week free trial.
The watchdog ruled that the ad must not be broadcast again in its current form until the restrictions on the free trial is made clear.