The Advertising Standards Authority (ASA) has started an investigation into Poundland after a rather controversial picture of a toy elf holding a teabag.
The picture, which shows the cheeky elf dangling the teabag over a doll's face, was thought by some to have sexual connotations.
The image was captioned "How do you like your tea? One lump or two?", which only increased people's suspicions.
The ASA was sent around 80 complaints due to the campaign, which was run by Poundland before Christmas.
It has said the majority of complainants found the images "offensive for depicting toy characters in a sexualised manner."
Poundland has claimed the situation is a "storm in a teacup." The company has also said there were thousands of people who enjoyed the "naughty elf pictures... not least because it reminded them that Britain is famous for the saucy postcard and panto."
Despite the investigation, Poundland stated that it is pleased that the amount of people who didn't get the joke "is so small."
The original image featured a box of Twinings tea, however the company stated it had no involvement in the advert when it was released.
A second image of the elf and the teabag was later posted by Poundland without the Twinings box.
Poundland has a right to reply to the ASA and will be asked to give evidence before a decision is made on whether the adverts should be banned.