Online shoppers ‘bombarded’ with buy now, pay later schemes, says Which?

Online shoppers are bombarded with Buy Now, Pay Later (BNPL) systems at the checkout, often with no warnings of the risk of late payments or debt, a watchdog warned.

A Which? A survey of 111 major retailers in fashion, baby and children’s items, and housewares found that 62 had at least one BNPL program at checkout and nine – the most baby and children’s products sold – had no information about late fees.

Four out of five of the retailers who offered a BNPL option advertised it on their product listing pages, which customers were directed to when they clicked items and then added them to their shopping cart.

Mostly, which ones? found, these ads on product listing pages did not contain critical late fees or credit checks, making it difficult for buyers to understand the differences between BNPL vendors.

BNPL products are becoming increasingly popular, allowing shoppers to pay for items interest-free within 30 days or in weekly installments.

However, failure to meet payments could have an impact on credit reports and creditworthiness, or could potentially result in customers being referred to a debt collection agency.

Klarna, Laybuy and Clearpay – the three largest BNPL providers – share guidelines for retailers on how to present their products, but which ones? found that some retailers did not comply.

At the time of which? Research has shown that Klarna’s advertising policies should always use the following risk warning: “Please display responsibly. Borrowing more than you can afford can seriously affect your financial situation. Make sure you can afford your monthly repayments on time. “

But which one? could not find this exact wording on 23 dealer sites. Although some retailers used similar warnings, others only warned that missing repayments could affect a person’s ability to use Klarna again.

Klarna has now updated the risk notice in its guidelines with a different wording and is in the process of communicating this to the dealers.

An online shopper said which one? he felt bombarded with various BNPL options when buying relatively inexpensive items himself.

He said, “I felt like I was being pushed to use a BNPL program. I can understand why people end up fighting. I am shocked at how prevalent the BNPL message is. “

The Financial Conduct Authority’s Woolard Review, published earlier this year, raised concerns about the presentation of BNPL programs at checkouts and called for urgent regulation of the BNPL market. But the UK Treasury Department’s plans for BNPL regulation have yet to materialize.

Which? CFO Gareth Shaw said, “While BNPL services offer checkout convenience, our research shows that online shoppers at major retailers are bombarded with these systems, often with no information or warnings about the risks of late payments or debt.

“If these risks are not communicated, customers can face unexpected fees or compromised creditworthiness.

“This shows why plans for BNPL regulation, which should include much greater marketing transparency, information about the risks of missed payments and credit checks, should not be delayed further before consumers are cleared to use BNPL providers.”

A Clearpay spokesperson said: “Clearpay enables responsible spending and promotes transparency at the checkout with clear guidelines and support for our merchants.

“A late fee disclaimer is clearly displayed at checkout before a transaction is finalized, and we do not report to credit bureaus so using Clearpay does not affect customer creditworthiness.”

Alex Marsh, Head of Klarna UK, said: “Our short-term fees and the interest-free Buy Now Pay Later products are a consumer-friendly and sustainable alternative to credit cards that carry high interest and hidden fees and encourage minimum payments to be made by millions of people each year sink deeper into debt.

“We maintain the highest standards of transparency with our customers by displaying clear terms and conditions every time a customer selects Klarna at checkout, and by working closely with merchants to make our payment options either on their website or on theirs To explain business. ”

Laybuy Managing Director and Co-Founder Gary Rohloff said: “We welcome the results of Which and believe it is important that all providers set high standards in terms of transparency and responsibility.

“We work closely with our retail partners to ensure they have the correct information for customers who choose to pay with Laybuy, however we cannot strictly enforce the information displayed on a merchant’s website and it is important that Customers make sure they are satisfied with the dealer’s own terms and conditions before buying from them. “

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