Buy now, pay later customers oblivious to the risk of debt, warns Which? | Loan and debt


Stricter guarantees are needed to protect the millions of UK buyers who use ‘buy now, pay later’ offers as many people don’t realize they are going into debt, a consumer organization has warned.

Buy Now, Pay Later (BNPL) allows buyers to delay payment for an item with no interest or fees – unless you don’t pay back on time, in which case some companies charge late fees.

BNPL’s top three companies are Klarna, Clearpay and Laybuy, and this form of unregulated interest-free credit has seen explosive growth during the coronavirus pandemic, especially among those under 30 and those with tight finances.

In response to concerns, the government announced last February that BNPL would be regulated by the Financial Conduct Authority, although the rules are not expected to come into effect until the end of the year or in 2023. A Treasury consultation, which is scheduled for ends Thursday (January 6), will be followed by an FCA consultation.

In the meantime, according to the consumer organization Which?

He said that many BNPL users he interviewed did not view these deals as a form of credit – instead, they described them as a “way to pay” or a “money management tool. “. This meant that they could unintentionally expose themselves to a range of potential problems if they didn’t pay back on time, such as late fees, black marks on their credit report, or having their file referred to a credit officer. recovery.

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Although BNPL is a form of credit, it works differently from more traditional methods of borrowing such as credit cards. For example, not all BNPL programs perform “hard” credit checks, during which a complete search of a person’s credit report is performed.

Rocio Concha, Director of Policy and Advocacy at Which ?, said: “BNPL programs can offer speed and convenience at the checkout, but our research shows that many users don’t realize they’re going into debt or consider the possibility. to miss payments. “

The consumer organization said that, “given the immediate risk,” BNPL companies should make their terms and conditions more accessible now. He added that affordability assessments should be carried out for all transactions before the regulation is introduced.


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