One in eight shoppers using online ‘buy now pay later’ schemes are being chased by debt collectors, while users have been charged a total of £39 million in late fees in the past year, leading charity warns
- Citizens Advice warns one in eight ‘buy now, pay later’ shoppers chased by debt collectors
- Research showed users of the plan were charged £39m in late fees last year
- None of the pay later checkouts warned customers against using collection agencies
One in eight shoppers using online “buy now, pay later” schemes have been hounded by debt collectors, Citizens Advice warned.
Research by the charity found that users of the increasingly popular credit repayment plan were charged £39 million in late fees over the past year.
But none of the “pay later” checkouts — which is a payment option on some leading retailers’ websites — warned customers that they could be referred to collection agencies for missed payments.
One in eight shoppers using online ‘buy now, pay later’ schemes have been chased by debt collectors, Citizens Advice warned (stock image)
Citizens Advice calls on the Treasury to urgently regulate the burgeoning sector, fearing shoppers will be left unprotected and misinformed.
The charity looked at 100 leading retailers and found that 38 offered the payment system.
Of those, only 11 percent warned shoppers they were entering into a credit agreement, while 89 percent put it in the fine print.
Citizens Advice asked the companies in the study whether they ever referred customers to collection agencies.
But none of the ‘pay later’ checkouts — which is a payment option on some leading retailers’ websites — warned customers they could be referred to collection agencies for missed payments (stock image)
Klarna, Clearpay, Laybuy and Openpay said they were doing this as a last resort. Splitit said no and PayPal declined to comment.
Millie Harris, of Citizens Advice East Devon, said the schemes give consumers a ‘false sense of security’, adding: ‘My concern is that people don’t process that buying now is credit.
‘They actually take out a loan, but they don’t see it as a loan. It’s a debt that’s almost under the radar.’