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.”

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