Buy Now, Pay Later firms refund customers and change “unfair” practices

Buy Now, Pay Later (BNPL) firms Clearpay, Laybuy and Openpay are refunding customers for erroneous late fees and have agreed to change their practices. Market-leader Klarna doesn't charge late fees and, therefore, isn't making any refunds, but is also changing its practices to offer greater clarity to its customers.

The refunds are for customers who have been charged late fees on orders they have cancelled.

It comes as the Financial Conduct Authority (FCA) begins to put more pressure on the BNPL sector in order to protect consumers. It also follows the news that BNPL agreements are set to be included on credit files for the first time later this year.

Who can get a refund - and how can you claim?

The FCA has used consumer laws to challenge the four BNPL providers, calling some of the terms and conditions on late payments "potentially unfair and unclear". It states that, when a customer cancels their full order, the repayment schedule should be immediately updated to avoid any late fees being charged for supposed "missed" future payments. This doesn't apply to orders where the customer has requested a partial refund, although the repayments due should also be changed to reflect the reduced amount owed.

It is estimated that only a small proportion of the estimated 10 million users of BNPL have been charged these incorrect late fees. If you believe you deserve a refund for a late fee you have wrongfully been charged, you should contact Clearpay, Laybuy or Openpay directly through your customer account.

What changes are being made to BNPL regulation?

As it stands, the BNPL sector is unregulated and, as such, the FCA has had to fall back on broader consumer laws rather than being able to enforce its own sanctions on the firms. However, the government has been consulting on how to bring the sector under the remit of the FCA, with proposed legislation likely to be brought in front of Parliament in the coming months.

For more information on BNPL, read our article "Everything you need to know about Buy Now, Pay Later".