Call for debt protection for online shoppers

Online shoppers need more protection from ‘buy now, pay later’ offers, a leading consumer group claims.

Which? says many customers do not realise it is a form of credit and could unwittingly be exposing themselves to serious risks of missing repayments, such as late fees, marked credit reports or referral to a debt collector.

Which says many users described BNPL as a "way to pay" or a "money management tool", rather than a credit provider. Although BNPL schemes are a form of credit, not all run hard credit checks and Which? found it was this ‘speed and simplicity’ at the checkout that contributed to customers misunderstanding the system.

Which? director of policy and advocacy Rocio Concha said: "BNPL schemes can offer speed and convenience at the checkout, but our research shows that many users do not realise they are taking on debt or consider the prospect of missing payments.

"That is why there must be stronger safeguards to protect consumers and warn about the risks of using the schemes. Payment terms, late fees and the potential consequences of missed payments should be communicated at the point of transaction.

"There must also be no further delay to plans for BNPL regulation, which should include much greater marketingtransparency,information about the risks of missed paymentsandcreditchecksbefore consumers are cleared to use BNPL providers."

BNPL has soared in popularity in recent years as a way for consumers to pay for goods and services, with the biggest provider, Klarna, now boasting 13million customers in the UK.