Resolver blog: Buy now, pay later – whose job is it to ensure fair treatment for consumers?

4 min read
March 30, 2021

News at the start of this year that ‘buy now pay later’ finance is due to come under regulation was heralded by many, including myself, as a positive. I highlighted the progress that this will undoubtedly make in trying to curtail a spiral of debt that we know consumers can get into when they can just pick and choose how to pay for goods across multiple retailers without being 100% clear of, or 100% scrutinising the terms and conditions. 

The idea of being able to have it now but spread the cost across ‘interest-free’ instalments is obviously attractive to many consumers. In theory, it should work, assuming you can afford the goods in the first place and regulation will undoubtedly yield a watchful eye over this. However, we’re seeing another major problem with this product that we don’t see will be tackled by the regulation that causes me to ask who is responsible for fair treatment towards consumers throughout the process of actually buying the goods? 

The return and refund lag

We’ve revealed that of the thousands of complaints made through us about buying goods through BNPL finance, more than one in 10 concerned issues returning items. This may prompt you to ask me ‘so what, hasn’t returning things and getting refunds been a problem everywhere this year?’ Well, yes. But here the penalties can be far higher than if you’d bought not using this type of credit. For example, if you have paid in full, who are you claiming the refund from? And if you haven’t, are you still expected to continue your payments – for items you don’t have?

The experiences that customers complaining through Resolver have seen highlight that there are no simple, standard and certainly not straightforward answers. Demands for continual payment for items they’ve sent back, late payment charges because they stopped paying for what they don’t have and partial refunds when a full one has been due. The list goes on.

The problem here is accountability. Technically, your contract upon purchasing something is with the retailer, so all issues should be taken up with them. But in this case, it’s tricky isn’t it? Even if a retailer has processed your refund, it’s perfectly clear that unless that message gets through to the BNPL provider, there’s every chance you’ll still be asked to pay those charges. And if the retailer hasn’t done their job, as we have seen so often this past year, and processed the refund in a timely fashion then you really don’t have a leg to stand on with the BNPL provider when they come asking for your money. 

No matter what situation you find yourself in, the end result is always the same – the consumer is left in a confusing bermuda triangle being passed from pillar to post to try and sort it out – for a process that’s meant to make online shopping ‘simple’.

What should be done?

If retailers are offering this type of payment arrangement for consumers, then their terms and conditions for returning goods and refunding their customers should reflect this. Currently, you have up to 14 days to cancel or return an order after you’ve received it, then you have to factor in actually getting it sent back, and then waiting for up to 30 days (often longer) for that money to be returned to you.

If a BNPL arrangement starts almost immediately, and continues on a weekly – or even monthly – basis, this simply does not work. We’ve heard from major BNPL players that the retailer must own the processing of a refund, but meanwhile, payments can still continue to be taken under their own arrangement. 

How is this fair – particularly when we know that even now, a year on from the ‘L’ word, consumers are still experiencing delays in getting their money back? Is it really that difficult for a retailer’s system to ensure the payment is stopped while the refund is being processed? Or for its terms and conditions to state that payment does not start until the 14-day cancellation right is exhausted, just for example? 

The disconnect between returns, refunds and charges experienced by many of those complaining to Resolver, has identified basic procedural issues when we blur the lines between retail and finance that consumers should not have to continuously chase to get sorted out – or face damaging consequences. 

When people are resorting to paying for items that were returned because they didn’t want a default notice, you know something is fundamentally wrong. In a world where automation is second nature, and with these types of agreements set to expand across various retailers and providers, this needs to get sorted. But my question is, who is going to provide the answer?

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