BUY now, pay later firms have been warned over misleading adverts in a bid to protect shoppers from taking on too much debt.
The UK’s financial watchdog has told companies adverts need to warn customers of the risks of borrowing more than they can afford to repay.
Buy now, pay later (BNPL) 是一个 type of borrowing which lets you make a purchase, but delay paying for it.
Shoppers are able to spread the cost of their hauls out over monthly instalments – and it’s popular because it’s interest-free.
Companies offering this service include Klarna, Clearpay, Laybuy and Zilch.
But companies have come under fire from experts who say customers are falling too easily into debt.
An estimated eight million adults owed money on BNPL purchases 去年.
The average debt per person stood at £538 per person, with £4billion owed in total, figures from Credit Karma showed.
Concerns have been raised that shoppers could turn to BNPL amid a cost of living crisis and take on more 债务 than they can afford to pay back.
现在, the Financial Conduct Authority has raised concerns over BNPL adverts on websites and social media, including influencers promoting products.
It said ads like these could be breaching rules, and warned firms they could be committing a criminal offence.
The watchdog said some were failing to warn consumers of the consequences of missed payments, the impact on people’s 信用评分, and did not make clear when charges become payable.
FCA consumers and competition executive director Sheldon Mills said: “As we face a cost-of-living crisis, consumers are having to make difficult decisions about their finances and how they pay for goods and services.
“Firms need to ensure consumers, particularly those in vulnerable circumstances, are equipped with the right information at the right time, so they can make effective, timely and properly informed decisions.
“It is vital that adverts are clear, fair and not misleading.”
It comes as for the first time ever, BNPL purchases will start appearing on customers’ credit reports with one of the UK’s three major credit reference agencies, TransUnion.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, 告诉太阳报 that late repayments could be logged on your file – which could stop you from getting a loan or credit in the future.
How to use BNPL responsibly
Now that BNPL purchases are being logged on credit reports, using the service can be a good way of building up your credit score – IF you use it sensibly.
如果你不, you might struggle to get a big loan like a mortgage.
Make sure to only use BNPL services if you need it.
If you use it frequently, it could be a red flag to lenders who might think you don’t have enough funds to make payments in full upfront.
If you are not able to keep up with your repayments, lenders are more likely to think you’ll default on other borrowing too.
Missing payments could indicate that you’re struggling with your finances.
You may think that opening multiple BNPL accounts and paying them off will improve your credit score by proving you can manage debt.
But it could be seen be lenders that you have lots of different piles of debt – putting them off giving you credit.
这是 five common mistakes you’re making using BNPL services – and how to fix it.
最近, the Treasury laid out plans to tighten up rules around BNPL in a bid to protect consumers – we explain what you need to know.