Almost a third of UK 18 to 34 year olds have been charged late payment fees when using Buy Now, Pay Later (BNPL) services, according to new research.
A report by the Centre for Financial Capability also revealed that around a quarter of all Brits that have used BNPL have been charged late payment fees.
The charity said that despite the risks of late payment fees, low credit scores, and debt collectors, around a third of all consumers in the UK have used BNPL.
Many BNPL users are unaware of these risks, with around a fifth unclear about what the late payment fees would be or what the impact would be on their credit score if they missed a payment.
The Centre warned that around a quarter of BNPL users have missed one or more repayments in the past six months, and of those, over a quarter have been contacted by debt collection agencies.
The research also demonstrates that of those that have missed repayments in the past six months, roughly two thirds have missed payments twice or more.
Trustee of the Centre for Financial Capability Jane Goodland said that the organisation's figures demonstrate the ongoing prevalence of BNPL and the “dangerous financial risks” of the payment option.
“As the ongoing cost-of-living crisis continues to impact the British public, it is apparent that many users are increasingly reliant on these schemes, without fully understanding the risks involved,” she said, calling for the government to introduce regulation for BNPL. “Most worryingly, our findings released today have revealed the significant number of those using the schemes who have fallen victim to late payment fees, poor credit scores and even contact by a debt collection agency.”
In November, Citizens Advice also warned that the government's delay in regulating BNPL is putting consumers at risk and exposing them to "unmanageable levels of debt".
The organisation also said that across 2023 it had seen a 67 per cent increase in people coming to it for help with BNPL.
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