Debt warning for 'buy now, pay later' online

Online shoppers using ‘buy now pay later’ agreements were collectively charged £39m in penalty fees in the past year, say finance experts.

Citizens Advice say 10% of shoppers who use the payment process and say more needs to be done to let consumers know the potential action they face if they fail to keep up payments.

The payments option often appears at checkouts on retail websites and can help spread the cost of purchases, interest-free, potentially avoiding expensive credit.

But there have been concerns that some people end up spending more than intended, slide into debt and may not understand the potential consequences of being unable to keep up payments.

The Government announced in February that interest-free buy now pay later credit agreements will be regulated by the Financial Conduct

Authority (FCA).

Millie Harris, a debt adviser at Citizens Advice, said: "My concern is that people aren't processing the fact that buy now pay later is credit. They don't realise there are going to be consequences if they don't pay. They are taking out what is effectively a loan, but they don't see it as one.”

Dame Clare Moriarty, chief executive of Citizens Advice, said: "A seamless buy now pay later checkout process should not mean shoppers have to dig around in the small print to find out they're taking out a credit agreement. The warnings should be unmissable.

"The buy now pay later industry has exploded and we need consumer protection to keep up with the changes in the way we live.”

Citizens Advice is urging anyone who has been contactedbydebtcollectorstogetfree, independent debt advice.