By Daniel Lanyon on Friday 3 September 2021
Citizens Advice says it fears for many people BNPL can be a slippery slope into debt.
One in 10 Buy Now, Pay Later shoppers have been chased for missing payments, rising to one in eight young people, according to a new survey for Citizens Advice.
BNPL is booming, with millions of shoppers in the UK now using the service to delay or spit payments over a number of months. Citizens Advice, a consumer charity focused on helping those in financial difficulty, says it fears for many people BNPL can be “a slippery slope into debt”.
According to its survey, which was carried out by Opinium with 2,003 UK adults, of those who were referred to a debt collector - usually via a text message or letter - for missed payments, 96 per cent experienced a negative consequence as a result.
Citizens Advice asked the BNPL firms featured in the research if they ever referred customers to debt collectors. Klarna, Clearpay, Laybuy and Openpay confirmed they do this as a last resort. Splitit said it doesn’t. PayPal refused to comment.
Responding to the data, a spokesperson for Clearpay said:
"Clearpay has never enforced a debt through enforcement agents or bailiffs. As a last resort, we sometimes pass information to a debt collection agency (DCA). However these are regulated by the FCA, and work within the guidance and frameworks of treating customers fairly. It is also important to note that when we pass on customer information to the DCA, we retain full control of the customer relationship, do not report to credit rating agencies and we never share customer information with aggressive doorstep collectors.”
Dame Clare Moriarty, Chief Executive of Citizens Advice, said: “The sheer number of shoppers facing debt collection is startling. We know from our frontline advisers just how much stress this can cause."
“A seamless Buy Now Pay Later checkout process should not mean shoppers have to dig around in the small print to find out they’re taking out a credit agreement, and could be referred to debt collectors if they can’t pay. The warnings should be unmissable."
“The Buy Now Pay Later industry has exploded and we need consumer protection to keep up with the changes in the way we live. We hope the Treasury can keep pace.”