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The Klarna Problem: is TikTok’s fast fashion obsession plunging Gen Z into debt?

Tilly Brogan
January 25, 2024

Like most things in life these days, poor credit scores and looming debt collections have reached meme status – I guess it’s true when they say, if it didn’t become a meme, did it ever really happen at all? But this time, I’m talking about the millions of TikTok users poking fun at the fact they’re in debt to Klarna.

For most online shoppers, Klarna is a regular bedfellow; even if you’ve never used the Swedish start-up that lets you “buy what you love” in smaller installments with no interest, no fees, and (supposedly) no negative repercussions on your credit score, you’ll no doubt have seen it when you go to checkout. And for Gen Z, Klarna has quickly become the sure-fire way to keep up with the latest fast fashion trends populating their most favoured app, TikTok.

Unlike the way most Millennials (and Zillenials) grew up consulting the pages of Seventeen and Cosmopolitan for the latest fashion trends, Gen Z are turning to TikTok for fashion guidance, particularly when it comes to fast fashion finds. So much so that TikTok is encouraging the consumption of fast fashion; or as Eliza Rudalevige puts it, TikTok is making fast fashion even faster. Rudalevige attributes this mostly to the rise in microtrends: clothing pieces that go in and out of style so quickly they don’t affect the baseline of what’s considered fashionable. These microtrends are fuelled by fast fashion supergiants who are quick to create their own knock-off counterfeits at a fraction of the price, see here: AliExpress, Amazon, and Shein. Once these viral microtrends have gone, well, viral, they’re shortly deemed unfashionable just a few days later. But not before they’ve been featured in countless online hauls. With 3 billion views on the hashtag #sheinhaul alone, videos like these rapidly accelerate the trend cycle. As a result, the short duration of these TikTok hauls is roughly the same length of time that Gen Z’ers end up favouring this specific trend.

Gen Z TikTok

And statistics show that this dangerous overconsumption of fast fashion giants has only worsened during the pandemic; at the same time that global lockdowns in March 2020 led to 27% of US customers admitting they planned to spend less on luxury fashion goods, fast-fashion retailer Boohoo claimed a 45% increase in revenue across all of its (primarily online) fashion brands. Over the same period, TikTok experienced a monumental surge in popularity. The app has since become the first non-Facebook mobile app to reach 3 billion downloads globally – it’s also worth noting that 60% of TikTok users identify as Gen Z.

As a result, fast payment credit schemes like Klarna are a guaranteed way for cash-strapped Gen Z students and a generation who don’t typically have huge amounts of liquid cash to stay on top of what’s currently TikTok trending – it’s no surprise that some of the Klarna’s most popular brands include fast-fashion favourites Missguided, Pretty Little Thing, and ASOS.

While the popularity of Klarna has skyrocketed during lockdown – the app’s value has since tripled in six months to $31 billion – so has the number of young people dangerously in debt to the ‘buy now pay later’ scheme. The Mancunian recently revealed the stark reality of numerous students now trapped in debt after using the service. While Klarna reminds users when payments are due, many claim they only receive one reminder email – and if the customer fails to act, their account is sent to a debt collection agency. There is also the option to ‘snooze’ payments for 10 days – a quick fix solution that means many young people with no previous experience in credit card payments often find themselves in a financial “black hole” with no way out.

A study further found more than 40% of people who had used a ‘buy now pay later’ scheme missed a payment.

Doubts about the sincerity of Klarna aren’t anything new. The company has since responded to backlash by launching KlarnaSense, an online initiative that promotes mindful shopping by asking shoppers to consider three things before they press confirm: Do I love it? Will I use it? Is it worth it? Klarna’s financial wellness page also offers helpful advice on things like budgeting basics, ways to save money, and more FAQ’s about how the service works. Whether anyone actually reads this advice, that’s another question. And that’s before you get started on the hypocrisy of it. Surely an instant credit scheme that encourages impulsive buying (and even financial recklessness) providing resources about financial competency is entirely self-defeating? Especially when Klarna themselves have estimated that consumers spend on average 55% more when given the option of delaying or paying over several weeks. At best, even if Klarna’s resources are good, the very nature of their service undermines their effort. At worst, these resources are a way for Klarna to cover their own backs and put the blame back onto the shopper themselves – at which point, it’s usually too late.


Above: Klarna advertisement from

There is also an increasing number of creators on TikTok offering their own honest thoughts on schemes like Klarna. The irony is that these videos can be found under the same hashtag (#klarna) where thousands of others revel in the fact that their excessive clothing hauls have made them hundreds of pounds in debt to the service; this video from Citizens Advice offering 5 things to know about ‘buy now pay later’ schemes, is stuck between one where someone realises they won’t have any money left from payday after paying off their Klarna debt, and another where someone celebrates how these credit schemes mean she can purchase brand new clothes without ever touching any of her own money.

The pressure for Gen Z to keep up with fashion trends has seen a huge movement towards instant credit schemes like Klarna, and found that 23% of Gen Z have turned to ‘buy now, pay later’ services over lockdown. As TikTok encourages Gen Z to burn through fast fashion trends at rampant rates, schemes like Klarna enable young people to spend more than they can afford just to keep up. The problems only arise if they don’t have enough money to make it to the finish line.

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