Online buyers are being showered with Buy Now Pay Later (BNPL) schemes at checkout, which often have no warning about late fees or the risk of going into debt, a watchdog has cautioned.
a that ? An investigation of 111 major retailers in fashion, baby and child and homeware found that 62 offered at least one BNPL plan at checkout, and nine — most of which were selling baby and children’s products — had late fees. No information was included about
Four out of five retailers that offer the BNPL option promote it on their product catalog pages, which are taken when customers click to view the item and then add it to their basket.
While BNPL services do offer convenience at checkout, our research shows that most major retailers are being bombarded online shoppers with these plans, often with little or no knowledge of late fees or the risks of going into debt. There is no warning.
More often than not, which one? Found, these ads on product listing pages did not include important information about late fees or credit checks, making it difficult for buyers to differentiate between each BNPL provider.
BNPL products are rapidly growing in popularity and allow buyers to make interest-free payments for items within 30 days or in weekly installments.
But failing to keep up with payments can affect credit reports and credit scores or potentially send customers to the debt collector.
karnas Laybuy and Clearpay – the three largest BNPL providers – share guidelines with retailers on how their products should be presented, but which? It was found that some retailers were not following these.
In 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 can seriously affect your financial situation. Make sure you can make your monthly payments on time.”
But which one? This exact term could not be found on 23 retailers’ sites. Although some retailers used similar warnings, others merely warned that missing repayment could affect a person’s ability to re-use Klarna.
Klarna has since updated the risk warnings in its guidelines with different wording and is in the process of communicating this to retailers.
Whom did an online shopper tell? He felt bombarded with various BNPL options when shopping for relatively inexpensive items.
He said: “I felt that I was being prompted to use the BNPL scheme. I can see why people struggle. It stuns me how prominent the BNPL message is.
Plans for BNPL regulation should not be further delayed, which should include greater marketing transparency, awareness of the risks of missed payments, and credit checks before consumers are approved to use BNPL providers.
The Financial Conduct Authority’s Woolard Review, published earlier this year, expressed concerns over how BNPL schemes were presented at checkout and called for immediate regulation of the BNPL market. But HM Treasury’s plan for BNPL regulation is yet to materialize.
Who? Gareth Shaw, Head of Wealth, said: “While BNPL services offer convenience at checkout, our research shows that online shoppers are being bombarded with these plans at most major retailers, often with late fees or loans. There is no information or warning about the risks of being in .
“Failing to communicate these risks could result in unforeseen charges or impacted credit scores to customers.
“This demonstrates why plans for BNPL regulation should not be further delayed, which should include greater marketing transparency, awareness of the risks of missed payments, and credit checks before consumers are approved to use BNPL providers. needed.”
A Clearpay spokesperson said: “Clearpay enables responsible spending and encourages transparency at checkout with clear guidelines and support for our retailers.
“A disclaimer regarding late fees is clearly displayed at checkout before the transaction is completed, and we do not report to credit agencies, so customer credit scores are not affected by using Clearpay.”
We work closely with our retail partners to ensure they have accurate information for customers who choose to pay with Lebue, however we are unable to strictly enforce the information displayed on a merchant’s website Huh.
Alex Marsh, Head of Klarna UK, said: “Our short-term fee and interest free Buy Now Pay Later products are a consumer-friendly and sustainable alternative to credit cards, packed with high interest rates, hidden fees and incentives Minimum payment due to which lakhs of people get into debt every year.
“We aim to be transparent with our customers directly through the terms and conditions whenever a customer selects Klarna at checkout, and by working closely with merchants to explain our payment options on their website or within their store. maintain the highest in relation.”
Gary Rohloff, Managing Director and Co-Founder of LaBeau, said: “We welcome What’s findings and believe it is important that all providers set a high level of transparency and accountability.
“We work closely with our retail partners to ensure they have accurate information for customers who choose to pay with LeBeau, although we do not strictly enforce the information displayed on a merchant’s website. are unable and it is important customers ensure that they are happy with a merchant’s own terms and conditions before buying from them.”