1 in 10 BNPL customers have been contacted by debt collectors amid concerns of “under the radar debt”

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One in every 10 ‘buy now, pay later’ (BNPL) customers say they are being chased by bailiffs and debt collectors as they face “under-the-radar debt.”

Citizens Advice, which surveyed more than 2000 adults who have used a BNPL service in the last 12 months, says that 12 per cent of 18 to 24-year-olds surveyed had been referred to debt collectors.

BNPL plans such as Klarna and Laybuy have skyrocketed in popularity during the pandemic, but are increasingly drawing scrutiny from both regulators and consumer rights organisations as more and more shoppers fall into unmanageable debt.

Over the past year, Citizens Advice estimates that UK shoppers were charged a collective £39 million in late fees.

It added that many consumers fall so heavily into debt because they fail to recognise BNPL payment schemes as loans.

“My concern is that people aren’t processing the fact that buy now pay later is credit,” Citizens Advice debt advisor Millie Harris said.

READ MORE: Quarter of young BNPL users struggle to pay for food, rent and bills as charity calls for “drastic overhaul”

“They don’t realise there are going to be consequences if they don’t pay – it gives them a false sense of security.

“I’ve seen people using it for their kids’ clothes and shoes that they would otherwise never be able to afford. They are taking out what is effectively a loan, but they don’t see it as one.

“For example, I helped someone who has tens of thousands of pounds of debt, but they don’t see buy now pay later as part of that total… It’s almost under-the-radar debt.”

These services also fail to make it clear that consumers could be referred to debt collectors if they miss late payments, the charity added.

After looking at 100 retailers who offer purchases via a BNPL schemes, the charity found that not one of them made it clear debt collectors could get involved if payments were missed.

Citizens Advice’s chief executive Dame Clare Moriarty added: “A seamless buy now pay later checkout process should not mean shoppers have to dig around in the small print to find out they’re taking out a credit agreement, and could be referred to debt collectors if they can’t pay. The warnings should be unmissable.”

Klarna, Clearpay, Laybuy and Openpay all responded to the report stating that they only use third party debt collectors as a “last resort”, with the latter stating it will never contact debtors in person.

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