Are there too many ‘Buy Now, Pay Later’ schemes at online checkouts?

The notion of preventing someone buying “luxury goods” on BNPL seems a little odd. Surely it is anyone’s freedom to buy what they like (and take the consequences) and there are many ways they can pay, including a credit card. It would not be known whether someone is making a one off exceptional purchase, what their reason is, who the “goods” are for. And, in any case, exactly what is a “luxury”? To many, it may be anything other than life’s essentials.

However, I have an inherent aversion to providing easy loans that can help people into debt that they have not the ability to handle. Pay day loans were an extreme example. The problem with BNPL, apart from being unregulated, seems to be their use for low value purchases, encouraging a lot of such purchases when they are unnecessary and, for some, unaffordable. The same argument applies to credit cards, of course.

Protecting people from themselves is a perennial problem. Should we even attempt it, and by what authority, when we live in a free society? Education is one way, experience is another where people who get into difficulties must learn the consequences and find their own way out.

But ban them purchasing particular goods in any way open to them? Not for us to decide, I would suggest.

I did not suggest that anyone should be prevented from buying luxury goods, Malcolm, simply that BNPL should not be offered on these goods. I understand that BNPL is extensively used to purchase fashion clothing and accessories.

I do not understand why BNPL is not currently regulated by the FCA.

It seems that clothing retailers and on-line purchasing are the main promoters of BNPL, possibly because they are the chief outlets for impulse buying where it is easy to add a few extras to the shopping basket without noticing the escalating cost.

I can’t see the point of any limitations on ‘luxury’ goods; discriminating between them and other purchases would be a problem and since many of them are likely to be gifts it seems unnecessary to complicate things like that.

There needs to be help for people who get into financial difficulties from overuse of extended payment facilities but not at the expense of others who manage their money responsibly. People who apply for a credit card are assessed to establish a suitable credit limit and their accounts are to some extent supervised. I don’t know whether any similar process applies to using BNPL.

My comment was made in the context of making financial – in this case purchasing – decisions – in perfectly legal circumstances.

Legislation is used to help prevent us being exposed to danger, fraud, for example. However, it does not prevent us, say, importing a dangerous product, buying illicit or harmful substances on the internet, investing money with an unregulated outfit. It seems to me that only knowledge, information, common sense, experience can help is avoid that potential harmful activity.

Making ill-advised purchases that get us into unmanageable debt is surely something we have to try to learn to avoid. Is there any “authority” that can stop this? Some agency that watches over each of us and governs our spending?

What would you classify as “luxury goods”?

”Which? is calling for greater regulation to ensure BNPL firms are being transparent about the risks of using their services.“

They also report ”In February this year, the government announced BNPL firms would be regulated.”

Read more: https://www.which.co.uk/news/2021/06/buy-now-pay-later-not-just-used-by-fashion-conscious-young-shoppers/ – Which?

It would be useful if Which? had also explained why this method of payment is currently not regulated, just as Em has done.

Thanks for explaining why BNPL is not currently regulated, Em.

Thank you, Beryl.

It’s interesting that BNPL appeals to — and to some extent is marketed towards — two particular groups who should not get themselves into financial difficulties and ought to be protected against that possibility : (a) People with no credit such as teens and young adults, and (b) People with poor credit

I liked this piece of advice at the end of the article — “Remember, your worth does not come from what you wear or the items you own. You are innately worthy and deserving of all that is good. You are worth saying no to BNPL offers that may negatively impact your emotional and financial wellbeing.

I am glad you picked up on the addendum John, which is probably the most revealing and important part of the article.

The fierce competition in the online marketplace is now heavily targeted at both groups, all of whom will be in possession of mobile phones, provided by parents in the interests of their young offsprings safety.