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Swedish firm Klarna ‘irresponsibly encouraged’ credit use to ‘improve people’s mood’ during lockdown, UK ad watchdog rules

Swedish firm Klarna ‘irresponsibly encouraged’ credit use to ‘improve people’s mood’ during lockdown, UK ad watchdog rules
Klarna, a popular ‘buy now, pay later’ service, has received a slap on the wrist from the UK’s advertising watchdog for promoting credit-fueled shopping as a coping mechanism during the coronavirus pandemic.

The Swedish bank, which offers a service that allows customers to make staggered payments for online purchases, became the subject of an Advertising Standards Authority (ASA) complaint after using Instagram influencers to peddle its deferred payment program as a mood-booster amid the health crisis. The company works with more than 200,000 retailers and has an estimated 10 million customers in the UK.

"@klarna.uk helping me get ready for the day ahead in lockdown and lifting my mood!" read one of the paid promotions, posted by Instagram user @bradders_21. Another sponsored message that appeared on a different influencer’s page hailed Klarna’s “huge beauty offering” and said the bank’s payment system allows people to “splurge” on skincare brands. Four ads in question appeared in April and May 2020 which made references to purchasing items as a way to boost one’s mood, at a time when many Britons were struggling financially and mentally due to the country’s Covid-19 lockdown.

The complaint was brought by Labour MP Stella Creasy, who claimed that the Instagram campaign was irresponsible. The Swedish firm responded to the complaint by arguing that the adverts were in full compliance with relevant regulations and were merely intended to “highlight that self-care, skincare routines and pampering could be beneficial for improving one’s mental health and staying entertained during the lockdown period.” The central theme of the posts, Klarna said, was the importance of “tak[ing] care of one’s self during the Covid-19 lockdown period.”

The ASA saw things different, however. While acknowledging that shopping for “non-essential items” was likely a “source of comfort” for many, the agency concluded that Klarna irresponsibly preyed on people’s vulnerabilities during the crisis and encouraged spending habits that would be considered excessive for the average consumer. The watchdog pointed to one sponsored Instagram post which promoted a £139 ($186) facemask and said affording the pricey PPE was “made easier” using Klarna’s services. 

We concluded that in the context of the challenging circumstances caused by the lockdown at the time, including impacts on people’s financial and mental health, the ads irresponsibly encouraged the use of credit to improve people’s mood.

In its ruling, the ASA instructed the Swedish bank not to run the ads again “in their current form.” The company, as well as the four Instagram influences who participated in the campaign, were also told that any future advertising must not “irresponsibly encourage” the use of Klarna’s services. 

This isn’t the first time that companies have been probed for coronavirus-related marketing faux pas. In March, the ASA received more than 150 complaints about fast food giant KFC’s slogan, ‘It’s Finger Lickin’ Good’, purportedly because it encouraged poor hygiene during the pandemic. The company announced in August that it would temporarily drop the catchphrase. 

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