Britain’s Financial Conduct Authority (FCA) has told 'buy now, pay later' (BNPL) firms to ensure contract terms are easy to understand after finding PayPal and QVC customers were at risk.
Following growing use of such services over the past year, the FCA said PayPal and television shopping channel QVC had been told to update the wording of their contracts to be easier to understand.
Though both have now done so, the FCA said the previous wording had placed people at harm, referencing the terms surrounding what happened when a customer cancelled a BNPL contract.
“When used appropriately, the product provides valuable benefits,” FCA consumer and competition executive director Sheldon Mills commented.
“But, we want to ensure that consumers, particularly those in vulnerable circumstances, have adequate protections and are given sufficient information.”
According to the FCA, some 27% of UK adults - around 14 million people - had used BNPL products in the six months to January 2023.
This was up on the 17% that said they had used such products, which allow goods to be paid for in instalments, in the year to May 2022.
Alongside this, the FCA highlighted an increase in the frequency of debt-hit people and those who had previously missed bill payments using BNPL products.
Given this increase, the regulator added: “The FCA reminds all firms to ensure that their consumer contracts comply with all requirements of consumer protection legislation that apply to their business.”