Online shoppers are bombarded with Buy Now Pay Later (BNPL) programs at checkout, often without warning about the risk of late fees or going into debt, a watchdog warned.
One who? A survey of 111 major fashion, baby and kids, and housewares retailers found 62 offered at least one BNPL program at checkout, and nine – the majority selling baby and kids products – did not include any fee information. delay.
Four in five retailers that offered a BNPL option promoted it on their product listing pages, which customers were redirected to when they clicked to view the items and then added them to their cart.
Most often, which one? Found, these ads on product listing pages did not include key information about late fees or credit checks, making it difficult for buyers to understand the differences between each BNPL vendor.
BNPL products are rapidly growing in popularity and allow buyers to pay for their items in 30 days or in weekly installments, without interest.
But not keeping up with payments can affect credit reports and credit scores or potentially see customers referred to a debt collector.
Klarna, Laybuy and Clearpay – BNPL’s three biggest suppliers – share guidelines with retailers on how their products should be presented, but which ones? found that some retailers did not comply with them.
At what time? research, Klarna’s advertising guidelines state that the following risk warning should always be used: “Please spend responsibly.” Borrowing more than you can afford could seriously affect your financial situation. Make sure you can pay your monthly repayments on time.
But which one? could not find this exact wording on the sites of 23 retailers. While some retailers used similar warnings, others only warned that missing refunds could affect a person’s ability to use Klarna again.
Klarna has since updated the risk warning in its guidelines with different wording and is in the process of communicating it to retailers.
An online shopper told Which? he felt bombarded with different BNPL options when purchasing even relatively inexpensive items.
He said: âI felt I was pressured to use a BNPL system. I can see why people end up struggling. It shocks me how predominant the BNPL message is.
The Financial Conduct Authority’s Woolard Review, published earlier this year, expressed concerns about the way BNPL programs are being presented at checkouts and called for urgent regulation of the BNPL market. But Treasury HM’s plans for BNPL regulation have yet to materialize.
Who? CFO Gareth Shaw said, âWhile BNPL services provide a convenience at checkout, our research shows that online shoppers are bombarded with these programs at larger retailers, often without any information or warning about the risks of late fees or going into debt. .
âFailure to communicate these risks could result in unexpected customer charges or affected credit scores.
âThis demonstrates why there shouldn’t be any further delay in BNPL regulatory proposals, which should include much greater marketing transparency, information on the risks of missed payments and credit checks before consumers are cleared. to use BNPL providers. “
A Clearpay spokesperson said, âClearpay enables responsible spending and encourages transparency at checkout with clear guidelines and support for our retailers.
âA disclaimer regarding late fees is clearly displayed at checkout before a transaction is completed, and we do not report to credit bureaus so customers’ credit scores are not affected by the transaction. use of Clearpay. “
Alex Marsh, Director of Klarna UK, said: âOur short-term, interest-free Buy Now Pay Later products are a user-friendly and sustainable alternative to credit cards, which are laden with high interest rates, hidden fees and encourage minimum payments that push millions of people into more debt each year.
âWe maintain the highest standards of transparency with our customers through simple terms and conditions presented each time a customer selects Klarna at checkout, and working closely with merchants to explain our payment options on. their website or in their stores. “
Laybuy Managing Director and Co-Founder Gary Rohloff said: âWe welcome Which findings and believe it is important that all suppliers set high standards of transparency and accountability.
âWe work closely with our retail partners to make sure they have the correct information for customers who choose to pay with Laybuy. terms and conditions before buying from them.