BNPL promotion rules 101

The following advertising guidelines provide a general overview of the requirements you need to follow. Remember that it is also your responsibility to learn and understand the laws governing the advertising of financial products.

When advertising financial products, it is important that you make the right disclosures so that consumers can easily understand what is being advertised. You MUST include the disclosure. It MUST be easy for consumers to see. If you cannot put the disclosure directly next to the messaging, it must be on the same page using a reference text or reference symbol, or One click away using a hyperlink. Disclosures inform customers of actually available terms, they must be clear and conspicuous, they must be legible—no one should have to squint to read them: 8 pt. font size minimum is usually sufficient and contrast text with background color for full visibility.

What if there is no space for a disclosure?

If disclosures are separate from the messaging they modify, you need to connect the messaging and the disclosure together with one of the following:

Hyperlink: Learn more.
Reference text: See footer for details.
Reference Symbol: (e.g., *,†) If using a reference symbol, the claim ends with the reference symbol and the disclosure begins with the same reference symbol.

The following additional disclosures need to be made when referencing payment terms of Pay in 4/Pay in 30 Products.

The following disclosures are required under TILA if you use “trigger terms” in your advertising.

If you use social media influencers, bloggers, or other third parties to advertise Klarna and your business, there is more you need to know!

When social media influencers, bloggers, or other individuals receive any type of payment to endorse or otherwise mention a product (called an “endorsement”), they are required to disclose the existence of the relationship on the post where the endorsement was made. The Federal Trade Commission (FTC) has released a guide you can share with bloggers that explain in plain language when and where they need to make disclosures here. There is also more information available to social media influencers and bloggers here.

When social media influencers and bloggers endorse Klarna’s products, they are endorsing a financial product. Therefore, they need to do two things.

• First, they need to disclose their relationship with you and Klarna. There are many ways to do that, but the FTC has provided easy-to-understand guidelines that you can share with your social media influencers here.
• Second, they need to provide a link to more details so that the required disclosures related to the advertising are only one click away from the post. They can do this in one of two ways:
• Link to the Klarna educational page on your site.
• Link to the Klarna US educational page here.

The following Pay in 4/Pay in 30 Advertising Guideline provides a general overview of the requirements you need to follow when advertising Klarna’s Pay in 4 and Pay in 30 products. Remember that it is also your responsibility to learn and understand the laws governing the advertising of financial products. Please ensure that you obtain advice from your own lawyers on all marketing activities.

This Pay in 4/Pay in 30 Advertising Guideline should be reviewed along with the Financing Advertising Guideline the Legal Disclosure Table and the Social Media Disclosures

If your ad mentions Pay in 4 or Pay in 30, the following disclosure is required to be included in the marketing materials. 

• Disclosure: *CA resident loans made or arranged pursuant to a California Financing Law license.

If your ad mentions both Pay in 4 and/or Pay in 30 and monthly financing, the following disclosure is required to be included in the marketing materials: 

• Disclosure: *Monthly financing through Klarna issued by WebBank. Other CA resident loans made or arranged pursuant to a California Financing Law license.

When referring to payment terms for Pay in 4, e.g., 4 interest-free payments of $X or Pay in 30, “Only pay for what you keep,” the following disclosures must be included:

• Pay in 4 Disclosure: *See payment terms. A higher initial payment may be required for some consumers. CA resident loans made or arranged pursuant to a California Financing Law license.
• Pay in 30 Disclosure: *See payment terms. CA resident loans made or arranged pursuant to a California Financing Law license.

If you list payment terms when referring to Klarna’s monthly financing products offered through Klarna’s partnership with WebBank, you need to understand the Truth-in-Lending Act. Please review the Financing section carefully and seek advice from your lawyers on advertising requirements under the Truth-in-Lending Act to ensure you understand and follow the laws and regulations related to advertising Klarna’s financing products offered in partnership with WebBank.

You should always have a Klarna educational page on your site. This page will educate your customers about Klarna’s products and make required disclaimers and disclosures. Your Klarna educational page can be automatically generated using Klarna’s On-Site Messaging tools, using these guidelines.

Emails with Klarna messaging must include disclosures as outlined in the disclosures section and on the legal disclosures table.

• The subject line and sender must be accurate and not misleading.
• Marketing emails must include an opt-out mechanism, and cannot be sent to customers who have opted out of marketing emails.
• Marketing emails must comply with the CAN-SPAM requirements.
• Emails with TILA trigger terms must include the full terms of repayment or a representative example in the email itself, not one click away.

• All relevant legal disclosures must be made.
• Disclosures can be verbal or shown on screen.
• Disclosures must be legible to a reasonable person (8 pt. or larger).
• Introduction of disclosures: Be sure they’re introduced at the same time as or before the trigger term, with enough video left to keep it on screen for the required length of time.
• Disclosures can be over any visual as long as they’re visible at the bottom.
• Disclosures need to be based on a reading time of 3 words/second.
• For any videos/TV spots that mention trigger terms, a representative example needs to be included. Please follow the guidance provided in the Financing Guideline regarding trigger terms and representative examples.

If you advertise using phone calls or text messages, then you are subject to the Telephone Consumer Protection Act (TCPA) and the requirements of carriers. These laws and rules require prior express written consent to send advertising via (a) calls to traditional home, business, or wireless phones or (b) texts to wireless numbers, among numerous other requirements. For example, you may not contact anyone on the national do not call registry.

The TCPA and carrier requirements are complex, and violating them comes with the potential for lawsuits and fines. You should obtain the advice of your own lawyers before sending advertising via telephone or text.

Do not use the following terms:

• “No fees” or similar
• “No credit checks/Application”
• “Free” or similar

If coupons/discounts/rewards are offered, they should be redeemable across all tender types, including Klarna. Avoid “no money down” deferral messages when advertising Klarna as a financing option. Depending on eligibility criteria, certain customers may be asked to make a down payment at checkout.

In addition to what we have covered so far, your advertising must also follow all of the laws that apply to financial advertising and advertising generally. This section summarizes key laws and regulations.

A. Unfair, Deceptive, or Abusive Acts or Practices (UDAAP)

Unfair, deceptive, or abusive acts and practices can cause significant financial injury to consumers, erode consumer confidence, and undermine the financial marketplace. UDAAP was established to prevent consumer harm by misleading or deceitful actions. There are both federal and state UDAAP laws and regulations.

B. Fair lending

Fair lending applies to the entire lifecycle of a loan, including advertisement of the credit product. The Equal Credit Opportunity Act (ECOA) is a law that requires credit products, like those offered by Klarna, to be advertised fairly to everyone.

• Avoid discouraging individuals from applying.
• Retailers cannot impose additional application requirements to the Klarna application process.
• Target a broad demographic.
• While a retailer may be inherently attractive to a particular demographic, the retailer should avoid targeting Klarna financing on a prohibited basis. Prohibited bases include race, color, religion, national origin sex/gender identity, marital status, age (provided the applicant has the capacity to contract) and income dependency on a public assistance program.
  

C. CAN-SPAM Act

The CAN-SPAM Act covers all commercial messages, which the law defines as “any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service,” including email that promotes content on commercial websites. CAN-SPAM includes business-to-business email. The Federal Trade Commission has provided the below guidance to comply with CAN-SPAM:

• Don’t use false or misleading header information. Your “From,” “To,” “Reply to,” and routing information—including the originating domain name and email address—must be accurate and identify the person or business who initiated the message.
• Don’t use deceptive subject lines. The subject line must accurately reflect the content of the message.
• Identify the message as an ad. You must disclose clearly and conspicuously that your message is an advertisement.
• Tell recipients where you’re located. Your message must include your valid physical postal address. This can be your current street address, a post office box you’ve registered with the U.S. Postal Service, or a private mailbox you’ve registered with a commercial mail receiving agency established under Postal Service regulations.
• Tell recipients how to opt out of receiving future email from you. Your message must include a clear and conspicuous explanation of how the recipient can opt out of getting email from you in the future. Craft the notice in a way that’s easy for an ordinary person to recognize, read, and understand. Creative use of type size, color, and location can improve clarity. Give a return email address or another easy internet-based way to allow people to communicate their choice to you. You may create a menu to allow a recipient to opt out of certain types of messages, but you must include the option to stop all commercial messages from you. Make sure your spam filter doesn’t block these opt-out requests.
• Honor opt-out requests promptly. Any opt-out mechanism you offer must be able to process opt-out requests for at least 30 days after you send your message. You must honor a recipient’s opt-out request within 10 business days. You can’t charge a fee, require the recipient to give you any personally identifying information beyond an email address, or make the recipient take any step other than sending a reply email or visiting a single page on an Internet website as a condition for honoring an opt-out request. Once people have told you they don’t want to receive more messages from you, you can’t sell or transfer their email addresses, even in the form of a mailing list. The only exception is that you may transfer the addresses to a company you’ve hired to help you comply with the CAN-SPAM Act.
• Monitor what others are doing on your behalf. The law makes clear that even if you hire another company to handle your email marketing, you can’t contract away your legal responsibility to comply with the law. Both the company whose product is promoted in the message and the company that actually sends the message may be held legally responsible.