The firm was promoting its identity theft insurance, which aims to protect victims of stolen or forged identity documents such as a passport or driving licence.
The leaflet showed four black men in a parade with one of the men shorter than the others and a frightened look on his face.
The text read: "Sometimes you might wish someone had stolen your identity." The advertisers said it had distributed three versions of the leaflet promoting its service to mobile phone insurance customers of its sister company.
Lifestyle Services Group said it had not meant to offend anyone and reassured the Advertising Standards Authority that the remaining leaflets had been destroyed.
The ASA concluded that by featuring black models, the mailing was was seen to reinforce a stereotype that black men are criminals and therefore likely to cause serious or widespread offence. The authority welcomed the advertisers' decision to withdraw the leaflet.
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