Buy now pay later customers may be being unfairly treated over returned goods and are 'bearing the brunt of dealing with complex retail procedures.
According to complaints website Resolver, patchy communication between retailers and buy now pay later (BNPL) schemes has left thousands of shoppers being charged - and even fined - for payments on goods they have returned to the retailer.
More than 17,500 borrowers complained to Resolver about BNPL schemes over the past 24 months. Among them, nearly 2000 people flagged up issues with refunded goods.
According to Resolver, common complaints include being charged for items despite having already returned them, facing lenders' late penalty fees on returned items, and lenders not paying refunds in full or delaying refund payment.
Customers also reported a lack of clarity over who was responsible for their refunds, with some BNPL lenders re-directing them to the shops where they bought the goods.
BNPL is a popular form of credit that lets consumers spread the cost of a purchase over several smaller instalments.
According to Finder, almost 4 in 10 Brits have used a BNPL scheme, with some ten million shoppers saying they avoid retailers who don't have the option to use BNPL accounts at the checkout.
Young people are the most likely to use BNPL, with both Gen Z and millennials more likely than not to be subscribed to a BNPL account.
In February, the FCA was handed powers to regulate the sector over concerns about the ease with which consumers can rack up debts as the popularity of the schemes tripled in 2020.
Because BNPL is unregulated, consumers don't need to pass credit checks to start borrowing. While this is convenient for consumers with low credit, it places the most financially vulnerable at risk of over-indebtedness.
Resolver CEO Alex Neill points to lack of clarity as a reason behind many customers' woes:
The problem here is accountability. Technically, your contract upon purchasing something is with the retailer, so all issues should be taken up with them. But in this case, it's tricky. Even if a retailer has processed your refund, it's perfectly clear that unless that message gets through to the BNPL provider, there's every chance you'll still be asked to pay those charges, No matter what situation you find yourself in, the end result is always the same – the consumer is left in a confusing Bermuda triangle being passed from pillar to post to try and sort it out – for a process that's meant to make online shopping 'simple'.
Resolver asked three of the significant BNPL providers to explain their policy on payments for returned goods.
Klarna acknowledged the issue and told Resolver the company was working on ways to make it "quicker and easier" for customers to process refunds. In the meantime, it encouraged users to contact customer services through the app or website.
Meanwhile, LayBuy clearly stated that until retailers approve refunds, account holders are liable for any outstanding payments.
Cleary, another popular provider, stated it would protect its customers if they were "concerned" about retailers, but gave no details on customers' payment liability while waiting for refunds.
As well as the lack of clarity on policy from BNPL providers, Neill points out that the timeframes for shoppers' agreements with retailers doesn't match up with the timeframe for BNPL obligations:
Currently, you have up to 14 days to cancel or return an order after you've received it, then you have to factor in actually getting it sent back, and then waiting for up to 30 days (often longer) for that money to be returned to you. If a BNPL arrangement starts almost immediately and continues on a weekly – or even monthly – basis, this simply does not worShe said
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