Buy now, pay later firms in UK warned over influencer ads on social media
The city watchdog has informed buy now, pay later firms such as Klarna and Clearpay that it has seen online ads and posts by social media influencers that break rules by not warning of risks such as taking on unaffordable debt.
The Financial Conduct Authority (FCA) has written to companies in the multibillion-pound buy now, pay later (BNPL) sector promising to take action over unfair and misleading promotions, with more consumers looking into using such services as the cost of living soars.
BNPL services soared in popularity during the coronavirus pandemic, and allow customers to stagger payments for products such as clothes and furniture with no interest or fees – unless they fail to pay back on time.
The model is particularly popular with millennials and generation Z shoppers, who can delay payments for goods at hundreds of retailers.
“As we face a cost of living crisis, consumers are having to make difficult decisions about their finances and how they pay for goods and services,” said Sheldon Mills, the executive director of consumers and competition at the FCA.
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“Firms need to ensure consumers, particularly those in vulnerable circumstances, are equipped with the right information at the right time, so they can make effective, timely and properly informed decisions. It is vital that adverts are clear, fair and not misleading.”
The FCA, which recently held a round table with BNPL providers to discuss forthcoming regulation and called on firms to do more to support borrowers in financial difficulty, said it has seen promotions for products “without fair and prominent warnings of any risks to
Read more on theguardian.com
