- Buy now pay later service Klarna has had four of its adverts banned by the UK’s Advertising Standards Authority (ASA).
- The ad watchdog said four ads posted by Instagram influencers “irresponsibly” linked deferred payment services with the lifting of low mood during the UK’s coronavirus lockdown.
- Klarna, worth $10.65 billion, saw its transactions increase by 43% year-on-year for the first nine months of 2020 during Covid-19.
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Buy now pay later service Klarna has been rapped by the UK’s advertising watchdog over four ads posted by Instagram influencers earlier in 2020.
The Advertising Standards Authority (ASA) said the ads “irresponsibly” implied the service “boosted” people’s mood during the pandemic.
Klarna allows online shoppers with major retailers such as Sweaty Betty and Ralph Lauren to pay for items in installments, or in full at a later date. It claims to have 90 million customers worldwide, and 12 million monthly active users on its app. The company is valued at $10.65 billion, making it Europe’s most valuable private tech company.
The four ads were posted by influencers Bradley Harper, Claire Menary, Aisha Master, and Yasmin Fatollahy through the spring, when the UK was in lockdown. All posted pictures of themselves using or wearing new products and using language such as “getting dressed up can be a total mood booster… #KlarnaIt.”
You can see a screenshot of the one of the four banned ads, from Yasmin Fatollahy, below:
The ASA said: “Four Instagram posts by influencers promoting Klarna were banned for irresponsibly encouraging the use of their deferred payment service by linking it with the lifting of low mood during the Covid-19 lockdown.”
Klarna has removed the ads and must not show them again in their current form.
The ad ban comes as the ASA cracks down on services that could encourage users to take on debt. Buy now pay later providers have been given until March to change their marketing tactics to ensure that users are not misled about signing up for credit services. Services such as Klarna are under growing scrutiny, as the buy now pay later space is not regulated by the UK’s Financial Conduct Authority (FCA).
Klarna recently reported transactions on its platform were up 43% year on year to $43 billion for the first nine months of the year, marking a boost in usage during the pandemic.
A Klarna spokesperson said the firm was “disappointed” by the ASA’s decision and that the four posts had been removed.
The spokesperson said: “We understand our obligations and take our role as an advertiser extremely seriously, particularly in the context of supporting responsible spending and financial well-being during what’s been a unique and challenging year for UK consumers.”
The company also called for greater clarity around advertising and regulation and said it was working with media owners, consumers, influencers, and others to help create guidance for buy now pay later operators.
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