One in eight young BNPL users chased by debt collectors

One in eight – 12 per cent – of consumers between 18 and 34 have been chased by debt collectors after using Buy Now, Pay Later (BNPL) services.

This number falls to one in ten – 10 per cent – for the general consumer population according to research by Citizens Advice.

The independent organisation’s research surveyed over 2,000 UK adults in July who had used BNPL services in the previous 12 months.

The vast majority - 96 per cent - of those that were referred to a debt collector said they experienced a negative consequence according to the research.

These negative consequences included sleepless nights, ignoring texts, emails and letters in case they were about debts, avoiding answering the door, borrowing money to repay the debt, or deteriorating mental health.

BNPL firms Klarna, Clearpay, Laybuy and Openpay told Citizens Advice they only refer customers to debt collectors as a last resort.

Splitit said it doesn’t refer customers to debt collectors over late payments and PayPal did not provide a comment.

The majority of Gen Z and Millennial shoppers favour BNPL according to research commissioned by PayPal; 57 per cent said it was a “smarter way to shop” and 37 per cent said it gave them “more control of their finances” in its statistics.

Almost a third - 33 per cent - of consumers said that no late fees are an important feature when choosing a BNPL option according to PayPal’s research.

BNPL payments accounted for 3.6 per cent of UK online sales last year, according to research commissioned by Klarna in March.

“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,” said Clare Moriarty, chief executive of Citizens Advice. “The warnings should be unmissable.”

“At Klarna we only ever use debt collection agencies to help us contact customers we are unable to reach and we do this on fewer than 1 per cent of orders,” said Alex Marsh, head of Klarna UK. “The debt collection agencies we work with are all FCA authorised and will only contact customers by telephone or email and do not use bailiffs.”

He added: “We encourage any of our customers whose circumstances have changed, to please get in touch so we can help you with a plan to get back on track.”

    Share Story:

Recent Stories


New Business Frontiers
FStech’s Mark Evans discusses the future of financial services with Liu Jianning of Huawei, covering the limitations that current thinking can impose, how financial institutions can embrace technology to be both agile and resilient, and making space for the organisation to focus on the job of creating innovative business models and on delivering business value for their customers.

The Future of Intelligent Finance
FStech Group Editor Mark Evans sits down with Jason Cao, President of Global Financial Services Business Unit, Enterprise BG at Huawei ahead of its Intelligent Finance Summit which was held on 3rd and 4th of June in Shanghai. This Q&A delves into key trends in digital transformation of the financial services industry as well as a look at how data, robotic infrastructure, intelligent storage and innovative technologies are shaping the future for FSIs.

Cracking down on fraud
In this webinar a panel of expert speakers explored the ways in which high-volume PSPs and FinTechs are preventing fraud while providing a seamless customer experience.