New research by Resolver has found that in the last twelve months alone, there were 8,577 complaints about buy now, pay later lending with 17,726 have been made in the two and a half years that Resolver has been helping people to complain about this type of credit.
The data also reveals that problems are arising due to returned goods not being processed in time and these are driving the largest number of complaints. This occurs when shoppers return goods but the retailer doesn’t process them or tell the credit firm in time, leading to defaults on the agreement.
The ‘new’ forms of buy now pay later credit (like Klarna and Clearpay) are driving the huge increase in complaints, a considerable proportion of cases are still about the traditional ‘catalogue or shop credit’ provided by some retailers themselves. Whilst issues to do with debt and financial difficulties are being passed to debt collectors too quickly.
Resolver’s CEO, Alex Neill, said “The announcement that ‘’buy now pay later credit is to be regulated is fantastic news for the millions of people who use these services, without realising the dangers that can arise if you get into difficulty paying.”
“The explosion in complaints Resolver has seen highlights how quickly we all have to adapt to the way new forms of credit work if the nation is going to avoid sleepwalking into debt.”
“I’d like to see more retailers being held to account for the information they provide about credit and the ease with which they allow you to borrow without warnings of the consequences. Though the financial services industry is tightly regulated, there is little protection outside of the courts for problems with retailers.”