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One in 10 “Buy Now Pay Later” customers chased by debt collectors

Last week, Citizens Advice published new research showing that one in 10 Buy Now Pay Later (BNPL) customers have been chased by debt collectors, rising to one in eight young people. However, not one of the BNPL checkouts on leading retailers’ websites warned people they could be referred to debt collectors for missed payments.BNPL represents a significant shift in how we spend online.

By offering to split and delay payments at checkout, people can enter into credit agreements in seconds and take out numerous products with different providers. While for some consumers these quick-to-use products are useful, they bring with them new risks:

  • In the past year, 1 in 3 BNPL users missed a payment or made a late payment. Shoppers were charged £39 million in late fees
  • Only 11% of BNPL online checkout pages warned shoppers they were taking out a credit agreement
  • Of those who were referred to a debt collector, 96% experienced negative consequences, such as sleepless nights, borrowing money to repay the debt, or their mental health getting worse
We’re calling for the Government’s upcoming regulation of these products to focus on 4 key principles:
  1. how the design of BNPL products impacts decision making, ensuring it helps, rather than hinders the customer experience
  2. making key information clear and easy to access – especially at checkout
  3. ensuring effective affordability checks are central to BNPL products
  4. ensuring customers in financial difficulty are treated fairly and consistently
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