Shopper ‘debt risk’ with buy now, pay later
SHOPPERS are being bombarded with Buy Now Pay Later schemes – often without being warned of late fees or the risk of falling into debt, a report has found.
More than half of the UK’s biggest online retailers analysed were offering at least one form of payment plan, consumer watchdog Which? found. Most were heavily promoting the schemes – yet several did not offer information on late payment risks.
Research by Citizens Advice last month found those using ‘BNPL’ were charged £39million in late fees over the past year.
Which? said the failure to ‘clearly communicate the risks’ could leave customers with poor credit ratings or even debt collector referrals. BNPL schemes have surged due to the convenience of letting shoppers pay for items in 30 days or weekly instalments, interest-free. Their popularity tripled in the pandemic as shopping was driven online, the Treasury said.
Klarna, one of the largest BNPL providers, says there should always be a warning that borrowing more than you can afford can ‘seriously affect’ your finances
But Which? found some retailers were not adhering to such guidelines – with this warning not found on the sites of 23 offering the payment plan.
The investigation looked at the BNPL options on the websites of 111 of the biggest online retailers in fashion, baby and child, and homeware products.