Online shoppers 'bombarded' with Buy Now, Pay Later schemes
There has been a surge in online schemes for consumers
Online shoppers are being bombarded with Buy Now Pay Later schemes at the checkout but are not always getting the correct warnings according to a new investigation.
The Which? investigation found that often, the Buy Now Pay Later offer (BNPL) provided no warnings about the risk of late fees or getting into debt.
The investigation into 111 major retailers in fashion, baby and child, and homeware sectors found 62 offered at least one BNPL scheme at the checkout.
Nine of the 62 retailers didn't include any information about late fees.
They also found four out of 5 of the retailers that offered a BNPL option promoted it on their product listing pages which customers were taken to when they clicked to view items and then added them to their basket.
BNPL products are rapidly rising in popularity and allow shoppers to pay for items in 30 days or weekly instalments, interest-free, but failing to keep up payments can affect credit reports and credit scores or potentially see customers referred to a debt collector.
'Make sure you can afford your monthly repayments on time'
Klarna, Laybuy and Clearpay - the three largest BNPL providers share guidelines with retailers about how their products should be presented, but Which? found some retailers were not adhering to these.
At the time of the Which? research, Klarna's advertising guidelines said the following risk warning should always be used:
"Please spend responsibly. Borrowing more than you can afford could seriously affect your financial status. Make sure you can afford your monthly repayments on time."
Klarna has since updated the risk warning in its guidelines with different wording and is in the process of communicating this to retailers.
One online shopper told Which? he felt bombarded with different BNPL options when shopping for even relatively inexpensive items.
He said: "I felt I was being pushed into using a BNPL scheme. 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 around how BNPL schemes were presented at checkouts and called for the urgent regulation of the BNPL market. But HM Treasury plans for BNPL regulation are yet to materialise.
'No information or warnings about the risks of late fees or getting into debt'
Which? head of money, Gareth Shaw said:
"While BNPL services offer convenience at the checkout, our research shows that online shoppers are being bombarded with these schemes at the biggest retailers, often with no information or warnings about the risks of late fees or getting into debt.
"Failing to communicate these risks could land customers with unexpected charges or impacted credit scores."
Who owns what on the High Street?
Burtons and Dorothy Perkins
Online retailer Boohoo have bought both the Dorothy Perkins and Burton brands from Arcadia group. They haven't taken the actual shops though, which will permanently close.
Wallis
Fashion brand Wallis was also part of the £25.2 million deal that Boohoo made for parts of the Arcadia group, including Burton and Dorothy Perkins, which mean the Wallis shops will also leave the High Street.
Topshop & Topman
ASOS have bought this part of the failed Arcadia group, paying £292 million for brands including Topshop and Topman. The shops themselves were not part of the deal though, so it looks like they will close.
Miss Selfridge
Miss Selfridge was another one of the brands that ASOS bought alongside Topshop, Topman and HIIT and will also mean the shops will close.
Debenhams
Boohoo have also bought the Debenhams in a £55 million deal which saw the company's 242-year-old name survive but all 118 stores shut.
Oasis and Warehouse
Boohoo have been expanding for the last few years - in 2020 they bought Oasis and Warehouse's online element for £5.25 million as the shops had already closed.
Karen Millen & Coast
Boohoo also bought the brands Karen Millen and Coast in 2019 when it went into administration and stores closed.