Klarna ads banned for suggesting borrowing boosts mood

All the ads appeared on the Instagram pages of influencers, with mood boosting explicitly mentioned in each of them.

Klarna argued the posts were designed to encourage customers to take care of themselves and their mental health during the first coronavirus lockdown, but the Advertising Standards Authority (ASA) disagreed.

The ads have been banned and ASA have warned Klarna and all four influencers they must not irresponsibly encourage the use of the deferred payment service.

Credit: William Potter/Shutterstock.com

Boosting mood

The four ads appeared on the influencers' Instagram pages between 1 April and 28 May 2020.

Three of them referred to a £500 beauty bundle giveaway and mentioned mood boosting in their posts, while the earliest post thanked Klarna for the reminder that dressing up could be a mood booster.

All were correctly identified as ads in line with advertising guidelines, and all included the hashtag #KlarnaIt.

That hashtag is used on Instagram by influencers and businesses to encourage customers to use Klarna's deferred payment service to buy things they want.

Complaint

Stella Creasy, the MP for Walthamstow, complained to ASA about three of the ads, questioning whether they were irresponsible for encouraging the use of Klarna's services to boost low mood issues connected to the Covid-19 crisis.

ASA added the fourth advert to the investigation after questioning whether it could be criticised for the same reason.

Klarna argued the ads complied with the advertising code and that they intended to highlight self-care routines could be beneficial for people's mental health and entertainment during the coronavirus lockdown period.

They also argued there was no inference in the ads that using Klarna would lighten a person's mood.

ASA disagreed, singling out aspects of the ads which used emotive language to play on the frustration of lockdown restrictions and encouraged customers to buy a relatively expensive beauty item that would not usually be part of a person's general spending habits.

The use of the hashtag was also highlighted as problematic, even when linked to a competition that was free to enter. ASA judged the purpose of the posts was not to link to the competition but to promote the option of using Klarna's services.

Their conclusion was to ban the ads due to their irresponsible encouragement of the use of credit to boost a person's mood in the context of the challenging circumstances of the lockdown.

None of the ads must appear in their current form again. ASA has also warned Klarna and all four influencers their future ads must not encourage the use of Klarna's deferred payment services in an irresponsible way, particularly by linking it with improved mood.

Money and mental health

ASA's judgement on these ads links in with several long-running debates about the use of credit.

As far back as 2014, the Financial Conduct Authority (FCA) was warning most customers only took credit cards after being worn down by continual marketing rather than seeking them out themselves.

Klarna markets itself as a healthier alternative to credit cards, allowing customers to spread the costs of purchases by paying in instalments. They have more than 10 million UK customers, with an average age of 33.

However, various organisations including the FCA in 2017 have flagged up that younger people are deeply affected by rising levels of debt, and it's likely the coronavirus crisis has exacerbated those problems.

Mental health issues are also linked with problem debt, as analysis from the Money and Mental Health Policy Institute (MMHPI) demonstrated in March 2019.

So, any link between mood boosting and spending on credit, whether implicit or explicit, could be dangerous to both the mental health and financial health of potential credit customers.