According to an article by Cosmetics Business, TikTok has banned its users from advertising buy now, pay later (BNPL) schemes in a bid to stop bad financial advice from being shared across its platform.
This marks the largest intervention by any online platform to control monetary advice. It also means that some of the big players, such as Swedish fintech Klarna (Europe’s highest valued tech finance group), will not be able to advertise branded content on TikTok.
BNPL schemes have been exceptionally popular among beauty brands, with Klarna having partnered with multiple brands to offer monthly BNPL systems. This includes Charlotte Tilbury and Lady Gaga’s Haus Labs, as well as beauty retailers such as Asos, Feelunique and Cult Beauty.
The ban includes but is not limited to: “Lending and management of money assets, loans and credit cards, buy now pay later (BNPL) services, trading platforms, cryptocurrency, foreign exchange, debit and pre-payment cards, forex trading, commemorative coins, pyramid schemes (including non-financial services), investment services, credit repair services, bail bonds, debt assistance programmes, get rich quick schemes, debt consolidation services and penny auctions.”
Money.co.uk recently found that one-in-twelve people have used a BNPL scheme because of it being advertised by an influencer. 13% of consumers between the ages of 18 and 24 also said influencers have played a role in their decision to shop now and pay later.
Additionally, the research revealed that BNPL payments are expected after 49 days, however, many customers were found to stretch this out to 261 days.
“Despite Buy Now Pay Later schemes like Klarna, Clearpay and Zilch offering consumers a quick payment option, they are also a potential entry point into a world of damaging debt,” money.co.uk senior personal finance editor, James Andrews, said. “Our research shows that BNPL providers’ youthful marketing appeal and use of social media influencers, continue to encourage shoppers to sign up and potentially spend more than they can realistically afford.”
Andrews said he is pleased to see a social media platform taking “such a forward-thinking approach to the way that financial information is given, especially before formalised regulation of the BNPL industry comes in.”