The consumer champion found more than 170 online retailers, listed on Klarna, Clearpay or Laybuy’s apps or websites, that have incorrect returns or faulty goods policies on their sites.
The retailers also offered other payment methods at the checkout, such as PayPal, Apple Pay, Google Pay and Amazon Pay, as well as letting customers pay directly with debit or credit cards.
While Buy Now, Pay Later (BNPL) services offer speed and convenience at the checkout, they, like debit cards, do not give consumers the same protections as those paying between £100 and £30,000 with credit cards.
Which? looked into retailers offering BNPL schemes after hearing from one consumer that found a retailer with a dodgy returns policy through the lender’s app. Consumers could be wrongly putting their trust in these retail sites because they offer well-known BNPL schemes.
Many of the retailers Which? looked at refused refunds on full-priced, non-faulty or sale items, offering store credit or exchanges instead.
Some of the retailers gave shoppers 14 days or less to send back an unwanted item, while others charged “restocking” or “administration” fees for making a return, which could be as high as 20 per cent of the price of the unwanted items.
This is contrary to the Consumer Contracts Regulations, which gives consumers the right to cancel orders for most goods bought online within 14 days of receiving the item. These rules apply to items bought in a sale or on discount too, and shoppers shouldn’t be charged to make a return.
Which?’s research also found that 36 retailers had incorrect or misleading faulty goods policies that could leave customers stuck with items that are not fit-for-purpose.
Retailers were not giving customers long enough to detect or report a fault with a product, with some asking for faults to be reported within a few days of the order being received.
This is in breach of the Consumer Rights Act, which gives you 30 days to notice a fault with a product and get a refund, repair or replacement. After 30 days, you could still be entitled to a refund, repair or replacement if the item is faulty and in some cases, a further right to reject.
Customers could find themselves stuck with faulty goods – and having to temporarily continue paying them off to the BNPL scheme – if shopping with these retailers.
In all, Which? found 95 stores that did not offer refunds on sale items on its websites, while 74 retailers failed to give customers the minimum length of time to return orders.
17 retailers were also found not to offer any refunds to customers at all and 16 sites even charged fees for making item returns.
Which? is writing to all 170 retailers, urging them to change their policies in line with UK consumer law.
Separately, Which? is calling for unregulated BNPL products to become regulated by the FCA after it found that 24 per cent of BNPL customers were encouraged to spend more than they could afford.
The FCA is already looking into unsecured credit, which BNPL is one example of. Which? has given evidence to this review and will continue to share insight.
Adam French, Which? Consumer Rights Expert said:
“Many consumers could be lulled into a false sense of security by the convenience and familiarity of Buy Now, Pay Later. Online shoppers must not assume that a retailer is reliable just because it offers BNPL at the checkout.
“Given that many people’s finances are stretched now more than ever, we believe that the FCA needs to regulate the BNPL market to ensure there are more protections in place for consumers to avoid these costly situations.”
A regular Laybuy customer got in touch with Which? after finding an online store with a strange returns policy through Laybuy’s app.
Crazy Shred – which offers Laybuy, PayPal, BitPay and the option to arrange a bank deposit at the checkout – sells gym equipment, clothes and tech products.
Its returns policy on its website states that a £25 administration fee will be charged for orders cancelled after 48 hours of being placed.
This policy is contrary to the Consumer Contracts Regulations which gives you rights to cancel most online orders for goods from the moment they are placed, up until 14 days of receiving the goods.
“It surprises me that Laybuy doesn’t carry out all the relevant checks,” the customer told us. “I would never have found this company if they weren’t on the Laybuy seller page.”
Crazy Shred removed the administration fee from its returns policy after Which? raised the issue.
BNPL customer Lesley was left disputing a payment with Klarna after she shopped with a fraudulent site that’s since been taken down.
“When I saw the site offered Klarna payments, I didn’t even think to go on Trustpilot to check them out,” she told us. “You assume the company is credible if they’re running these kinds of financing options.”
Lesley was frustrated with herself for not researching the retailer beforehand.
“I felt stupid for using the retailer just because I saw Klarna on there – it gave me the confidence that they were credible,” she said. “Using Klarna is so easy to use that I feel I’ve been lured into a false sense of security.”
Lesley managed to get a full refund from Klarna and continues to use their products, but has since changed her shopping habits.
“I wouldn’t use Klarna for any retailer other than well-known high street stores now,’ she explained.”
How to shop safely and get a refund:
Don’t get caught out by retailers with dodgy returns policies – read Which?’s advice on shopping safely online and securing your money back if something goes wrong.
- Research the retailer and watch out for fake reviews when shopping with unfamiliar names
- Double check the retailers’ returns and faulty goods policies before making a purchase
- If you used BNPL to pay and are struggling to return the item(s) contact the retailer and the BNPL lender
- If you used a credit card or debit card to pay and are struggling to get a refund you may be able to attempt a Section 75 or chargeback claim
Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.
The information in this press release is for editorial use by journalists and media outlets only. Any business seeking to reproduce information in this release should contact the Which? Endorsement Scheme team at firstname.lastname@example.org.
“Clearpay carries out regular reviews of merchant websites, information, transaction data and inquiries to ensure retailers comply with consumer law. We take the protection and safety of our customers extremely seriously and encourage users to contact our customer service immediately if they are concerned about a retailer.
“Clearpay imposes strict contractual obligations on our merchants that warrant that they will always comply with consumer laws.
“We reserve the right to terminate merchant agreements and withhold payments to the merchant or refund the customer where we reasonably believe a merchant has breached consumer law .
“We regularly monitor and review merchant websites to ensure they are not selling prohibited items (as per our merchant category policy).
“We encourage anyone to contact our customer service immediately if they are concerned about any retailer. We take immediate action if an inquiry is received. Customers can contact us at email@example.com.”
“At Klarna we support regulation of the sector. It is vital that regulation is updated for the digital age, to ensure that consumers are protected regardless of which provider they choose.
“We carefully underwrite any potential partner before any onboarding or approval is confirmed. We make sure to follow guidelines for best practice and to always be fully compliant with market regulations.
“We make sure that terms and conditions, including our ethical guidelines policy, and applicable laws and regulations are followed.
“If we identify that a merchant is no longer operating to our required standards or detect any suspicious activity, we take immediate action.
“Our Klarna Buyers Protection Policy is designed to let consumers feel at ease when they shop in one of our online merchants’ stores. If goods are not delivered or if there is something wrong with them, we have a clear process to help shoppers resolve any issue and ensure that no customer is unjustifiably liable to pay for a purchase.
“Consumers who are concerned can easily raise a dispute in the Klarna app and contact Klarna customer services who will help find a solution. Klarna’s Buyers Protection ensures consumers are covered if something goes wrong.
“If an individual believes they have been the victim of fraud, they should contact Klarna directly to get help from a dedicated agent trained to handle fraud cases.”
“We are disappointed to hear that some customers have had a negative experience with a small number of retailers that offer Laybuy as a payment option.
“Once a refund is approved by the merchant, Laybuy will process the refund immediately and send an email to the customer to confirm. The bank may take 5-7 business days to process this. Until a refund is approved, customers are liable for any outstanding payments to Laybuy.
“Laybuy offers a range of options to any customer struggling with repayments or refunds. We encourage them to submit a request in detail here, so the Laybuy team can investigate and resolve the request. We do our upmost to help our customers where we can.”
“We want customers to buy with confidence anytime they use Amazon Pay. That is why we guarantee purchases from merchants when a customer uses Amazon Pay for qualified purchases on third party websites. The condition of the item you buy and its timely delivery are guaranteed under the Amazon Pay A-to-z Guarantee. Further details regarding which goods and services are protected by the A-z Guarantee and the way in which a customer can claim are set out here: https://pay.amazon.co.
“Google Pay provides a seamless transaction experience and we strive to make it as safe as possible for our users. Everyone making use of the Google Pay API on their website has to adhere to our terms of services, which are guided by high industry standards. When retailers diverge from these terms, we take action.”
Apple told us that Apple Pay customers are covered by exactly the same benefits and protections offered by the card they are using to make the payment. When a customer uses Apple Pay to make a purchase, the transaction is initiated, authorised and processed by the bank/issuer or card company.