The UK’s Advertising Standards Authority (ASA) has banned an Instagram campaign by Sweden-based buy now, pay later (BNPL) player Klarna for encouraging customers to take on debt to boost their spirits amid the Covid-19 health crisis.

Calling the campaign irresponsible, the regulator said: “We acknowledge that purchasing non-essential items was likely to be a source of comfort for some people during the national lockdown. However, each ad promoted the use of Klarna’s deferred payments 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.”

The campaign ran on Instagram in April and May 2020, with four influencers paid by the firm to encourage the use of BNPL services.

Collectively, the four influencers are said to have over 200,000 followers on Instagram.

Klarna has expressed disappointment in the decision and removed the four concerned posts.

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The firm said that it takes its obligations and role as an advertiser “extremely seriously” and said that the posts were a “genuine attempt” to recognise the mood of consumers at the start of the first lockdown.

The BNPL firm said: “Whilst we always adhere to all available ‘influencer’ guidelines and are compliant in terms of partnership signposting, we support more clarity in this space. This is a frankly a bigger topic than us.

“It cuts across brands and sectors, regulated or not, and we believe some leadership on this is required, which is why we are setting up an ‘Influencer Thought Leader Council’ consisting of media owners, consumers, wellness charity partner and influencers with the intention of providing better guidance for all brands in this space and in doing so support and engage with the ASA on this topic.”

Recently, Klarna entered into a partnership with payments and commerce solutions provider Verifone.

Under this partnership, Klarna’s BNPL service will be available to millions of Verifone devices in the US and Europe.