The Advertising Standards Authority (ASA) has released tougher guidance on how Buy Now, Pay Later (BNPL) schemes advertise their financial services.
The ASA’s sister organisation, the Committee of Advertising Practice (CAP), is responsible for writing the Advertising Codes, which advertisers are obliged to follow.
CAP has this month published guidance for the promotion of ‘delayed payment’ services, such as Klarna and ClearPay which have become increasingly available to customers at online checkouts.
These services enable payments to be deferred for a short period of time, with the guidance specifically relating to services which are not regulated by the Financial Conduct Authority (FCA).
The Committee said that although BNPL schemes are not a new form of payment or credit, their accessibility and popularity with younger consumers means potential customers may be less aware that deferring payment using a BNPL scheme is a type of debt.
CAP said the new guidance is intended to prevent ads for these services from misleading consumers, with special attention paid to ensuring consumers understand that BNPL services are a form of credit.
Advertisers have been given until March 2, 2021 to adjust their commercials to the new guidance.
In September this year Swedish BNPL specialist Klarna was valued at $10.65 billion after its latest equity funding round.
The funding means Klarna is now the highest-valued private fintech in Europe, and the fourth highest worldwide.
Klarna has seen a surge in demand for retailers wishing to sign up to its ‘buy now, pay later’ scheme, adding more than 35,000 new retailers in the first half of 2020 to its network of now more than 200,000 retail partners.