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. 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.”
What does the Government say?
A Treasury spokesperson said: “Buy now, pay later can be a helpful way to manage your finances but it’s important that consumers are protected as these agreements become more popular. By fairly stepping in and regulating, we’re making sure people are treated and only offered agreements they can afford.”
What do BNPL firms say?
Clearpay, Klarna, Laybuy and Openpay, four of the biggest BNPL providers in the UK, all told us that they only refer customers to debt collectors as a last resort.
A Clearpay spokesperson said: “It is important to note that when we pass on customer information to the agency, 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.”
Alex Marsh, head of Klarna UK, added: “At Klarna we only ever use debt collection agencies to help us contact customers we are unable to reach and we do this on fewer than 1% of orders. The debt collection agencies we work with are all Financial Conduct Authority authorised and will only contact customers by telephone or email and do not use bailiffs.”
A Laybuy spokesperson said: “When a debt is referred to a debt collector, we only ever refer outstanding purchase price of the product. Late fees, which are limited to a maximum of £24 for a single order, are never passed to a debt collector. Laybuy also pays all the cost for debt collection.”
Georgina Whalley, interim UK chief executive and group chief marketing officer of Openpay, added: “We refer some outstanding arrears to a third party, but Openpay customers are only contacted via SMS, email and post – never in person.”