Laybuy has been condemned by the advertising standards authority (ASA) for falsely stating that its credit checks would not “impact your credit score”.
The ‘buy now, pay later’ (BNPL) giant has been told by the ASA that an advert which appeared on its own website earlier this year must “not appear again” after ruling that it was misleading to customers.
The advert in question appeared on laybuy.co.uk in February this year on a page titled “Your Profile”, asking customers to “tell us a bit about yourself so we can do a secure credit check”, before stating that the process was “quick and doesn’t impact your credit score”.
One complainant provided a copy of their credit report which noted an entry from February 9 showing a credit check had been performed by Laybuy, accompanied by explanatory text that stated it “can impact your Experian Credit Score”.
Since that date, the complainants credit score had dropped, and while the ASA says it understands credit scores “complex and subject to a number of different factors”, it ruled that the advert was misleading.
The BNPL sector, which has seen explosive growth over the pandemic, has recently been dogged by an increasing backlash against its practices.
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Last month a damning report from Citizens Advice found that that a quarter of young BNPL users struggled to pay for food, rent and other bills.
According to its data, a whopping 45 per cent of 18 to 34-year-olds have used a BNPL scheme over the past 12 months.
Shockingly, 52 per cent of those young adults said they did so without realising it, while a further 35 per cent said they went on to regret doing so.
Klarna, the market leader in the UK, recently went on a PR offensive against growing controversy surrounding the sector, which is also coming under greater regulatory scrutiny.
Laybuy said that it has now removed the claim from its website and would ensure future marketing communications were subject to improved internal processes and controls.
They added that they are working with credit report providers to reverse the impact of credit score searches for affected customers.