The consumer watchdog Which called for stronger precautions regarding Buy Not Pay Later options (BNPL), as new research from the firm showed that consumers are not aware of the potential debt risks associated with this product.
In recent years, BNPL has become a popular payment method, offering consumers an alternative and flexible way to pay for goods or services. Recent research by Which, which included interviews with 30 BNPL users, raised concerns about shoppers who seem unaware of the potential risks associated with the ‘pay later’ option.
Many of the people interviewed saw BNPL more as a way to pay’ or a ’money management tool’ than a credit provider. This suggests that consumers might be unwittingly exposing their financial health to risks such as missed repayments, late fees, credit reports with marks, or referral to a debt collector.
This is due to the simplicity and speed of the payment method, which was noted in a release. Many users also stated that they don’t read the terms and conditions of BNPL providers. Participants indicated that they didn’t know about late payment fees, while others did not consider whether they could make repayments. Many participants also incorrectly assumed that the schemes were regulated.
It referred to its prior research on BNPL products that showed people were more likely to use the method during stressful or challenging times in their lives such as a missed payment or major life events.
The company requested that BNPL providers implement stronger safeguards to protect customers. This included steps at checkout to ensure shoppers understand the risks. It requested that key information such as late fees and payment terms be made available at the time of transactions and more easily accessible terms and conditions.