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One in 10 relying on Buy Now Pay Later for Christmas - here are Citizens Advice’s six need-to-knows

Almost one in 10 people in Great Britain (9%) are planning on using Buy Now Pay Later (BNPL) for part of their Christmas shopping, Citizens Advice has found. 

Out of the 43% resorting to borrowing to help cover Christmas this year, one in five said they'll be turning to BNPL to pay for at least part of their shopping. 

Yet despite the Buy Now Pay Later sector growing rapidly, it remains unregulated. This means people have less protection as opposed to more traditional forms of regulated borrowing, such as credit cards and overdrafts.

Citizens Advice is calling for the sector to be urgently regulated to make sure consumers are properly protected. It has released six need-to-knows for anyone thinking of using one of the schemes this Christmas.

Kate Hobson, Consumer Expert at Citizens Advice, said: “Money can often be tight in the run up to Christmas, but it’s still really important not to spend more than you can afford. 

“If you’re considering using Buy Now Pay Later, make sure you understand what you’re signing up for, how you’ll make the repayments and what will happen if you can’t pay on time.

“As always, if you’re struggling with any kind of bill, get free, independent advice as soon as possible. Our advisers can help you understand your options and come up with a plan.”

She outlined six need-to-knows for anyone planning on using BNPL:

  1. Understand what you’re signing up for. Check how and when you’ll need to pay, and if you could be charged late fees or interest.
    It’s also worth noting your credit score could be affected if the BNPL firm reports late payments, or if you’re referred to a debt collector for missed payments, and you then don’t pay the debt collector.

  2. Have a plan for how you’ll repay. While it can be tempting to split payments, make sure you have a plan for how to pay the money back - particularly if your circumstances or income were to change.And if you're using BNPL repeatedly or using multiple BNPL options, make sure you know how much you owe in total.

  3. If you’re struggling to pay, get help ASAP. If you’re worried see Citizens Advice Help with Debt, or contact your nearest Citizens Advice as soon as possible.
    You should also ask the BNPL firm if it can help, such as lowering your monthly payment or waiving a late fee. But this could mean you’re charged interest etc, so always make sure you understand what you’re agreeing to.  

  4. If you need to cancel or return items, contact both the retailer and the BNPL firm. This is because your consumer rights are with the retailer, but you have a separate agreement with the BNPL firm to pay for what you buy.
    Generally the retailer will refund the BNPL firm, which will refund you, or adjust the amount you owe if you only returned part of an order. 

  5. If something goes wrong you can complain to the BNPL firm and the retailer. Again, your consumer rights are with the retailer, but your payment agreement is with the BNPL firm. BNPL firms have different rules on resolving disputes and so check what happens to your payment plan during this time.
    You could also try the Chargeback scheme that is offered by card providers to help get refunds (though there are no guarantees it’ll work) and you’ll need to continue paying the BNPL firm to ensure you're not in breach of contract.

  6. If you pay with a credit card beware of extra fees and less protection. Credit card purchases over £100 generally have Section 75 protection, which means the credit card provider may have to help if something goes wrong.
    But this protection doesn’t apply to BNPL purchases as you didn’t pay the retailer directly. You may be able to use the Chargeback scheme instead.
    It’s also worth noting that some credit card firms may charge interest or a fee for paying your BNPL bill with your credit card - so it’s worth checking before opting for this payment method.

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Gillian Cooper, Head of Energy Policy for Citizens Advice, said:

“Bulb customers will be protected by the special administration process and they shouldn’t see much change to their service for now.

“But when the country’s seventh largest supplier fails, serious questions must be asked about the state of the market and how it’s regulated. It’s clear reforms are needed to prevent consumers and taxpayers from paying the price for supplier failures in future.”

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Gillian Cooper, Head of Energy Policy for Citizens Advice, said:

“Suppliers continue to fall like dominoes. It’s customers who are paying the price, with uncertainty, inconvenience and ultimately higher bills.

“Last week, Ofgem set out how it intends to ‘raise the bar’ for supplier standards and improve their resilience in the short-term. This is a positive step, but it's clear that existing rules and their enforcement, has not been enough.

“Longer-term, Ofgem will need to do more to make sure companies are financially sound and provide good customer service. This should include protecting people from the loyalty penalty, which prior to the cap allowed companies to profit from those who didn’t or couldn’t switch.”

Advice for customers:

We recommend taking a meter reading for your own record. Wait to find out who your new supplier will be - it can take a few weeks, but they will be in touch. Your credit balance will be carried over to the new company once they’re appointed. In the meantime, be assured that energy supply will continue as normal.

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Matt Upton, Director of Policy at Citizens Advice, said:

“The pandemic has pushed hundreds of thousands of people behind on their rent, owing at least £360 million, while the numbers of people seeking our help related to homelessness has increased significantly in recent months. 

“This funding is good news and cannot come soon enough for those who need it, but the scale of the challenge facing renters means it is simply not enough.”

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