Online shoppers spending more than planned after being tempted by 'pushy marketing' of credit schemes

Online shoppers are being encouraged to buy items on credit and pushed to spend more than they planned by a largely unregulated industry, consumer group Which? has warned. So-called buy now, pay later firms like Klarna and Clearpay offer shoppers the opportunity to spread payments over several months, usually with no interest payable. But experts fear that the “slickly-designed, easy-to-access" credit products are encouraging impulse buying and could lead young people into debt. A survey by Which? suggested that a quarter of users ended up spending more than they planned because the service was available. The group said firms use “pushy” marketing strategies to encourage people to use the schemes, with one in five respondents to the survey having been offered a discount to sign up. It is calling for the Financial Conduct Authority, the City watchdog, to be given additional powers to regulate the sector and ensure customers are treated fairly. Jenny Ross, editor of Which? Money, said: “While Buy Now, Pay Later services offer speed and convenience at the checkout, our research shows their design makes it far too simple for shoppers to spend more than they were intending. “This could lead to people building up debts that they may struggle to pay back, which is particularly concerning if they don’t understand the risks of using this type of product.” Klarna said it is “wholly incorrect” to claim it uses pushy marketing strategies. A spokesman added: “All Klarna customers are provided with our terms and conditions, which clearly outline the potential consequences of non-payment.” The firm said it offers a number of services which are already regulated by the FCA and applies the same high standards across its products. Clearpay said it supports “fit for purpose regulation to protect consumers” and has built-in consumer protection including freezing accounts after a non-payment. Gary Rohloff, managing director of Laybuy, another service, said its customers like buy now pay later because it allows them to pay in more affordable instalments and said anyone in financial difficulty should contact the firm. He added: “It’s important the industry holds the highest standards of transparency in how we treat and communicate with customers.”

Online shoppers spending more than planned after being tempted by 'pushy marketing' of credit schemes

Online shoppers are being encouraged to buy items on credit and pushed to spend more than they planned by a largely unregulated industry, consumer group Which? has warned.

So-called buy now, pay later firms like Klarna and Clearpay offer shoppers the opportunity to spread payments over several months, usually with no interest payable.

But experts fear that the “slickly-designed, easy-to-access" credit products are encouraging impulse buying and could lead young people into debt.

A survey by Which? suggested that a quarter of users ended up spending more than they planned because the service was available.

The group said firms use “pushy” marketing strategies to encourage people to use the schemes, with one in five respondents to the survey having been offered a discount to sign up.

It is calling for the Financial Conduct Authority, the City watchdog, to be given additional powers to regulate the sector and ensure customers are treated fairly.

Jenny Ross, editor of Which? Money, said: “While Buy Now, Pay Later services offer speed and convenience at the checkout, our research shows their design makes it far too simple for shoppers to spend more than they were intending.

“This could lead to people building up debts that they may struggle to pay back, which is particularly concerning if they don’t understand the risks of using this type of product.”

Klarna said it is “wholly incorrect” to claim it uses pushy marketing strategies. A spokesman added: “All Klarna customers are provided with our terms and conditions, which clearly outline the potential consequences of non-payment.”

The firm said it offers a number of services which are already regulated by the FCA and applies the same high standards across its products.

Clearpay said it supports “fit for purpose regulation to protect consumers” and has built-in consumer protection including freezing accounts after a non-payment.

Gary Rohloff, managing director of Laybuy, another service, said its customers like buy now pay later because it allows them to pay in more affordable instalments and said anyone in financial difficulty should contact the firm.

He added: “It’s important the industry holds the highest standards of transparency in how we treat and communicate with customers.”