March Deadline For Buy Now Pay Later Offerings

Source: Financial Times

'Buy now pay later' providers and merchants have until 2 March 2021 to meet new guidance on how to comply with advertising standards. The guidance is summarised below. Please let me know if you need assistance.

Unregulated BNPL offerings allow consumers to defer full payment for a short period or allow payment by instalments, without interest.

To comply with the Advertising Standards Authority's CAP and BCAP Codes, all marketing communications for BNPL (including text on online checkout pages) must not be misleading. 

The ASA requirements apply even though the offering is not regulated by the Financial Conduct Authority, so it must be clear that BNPL services are still a form of credit and that using it could result in late payment fees, referral to debt collection agencies and have a negative impact on the customer's credit score. 

Marketing should not imply that is suitable for all customers or is risk-free credit.

Any claims that using BNPL will not impact a person's credit score or have no consequences for missing payments must be substantiated - particularly as debts may be sold to debt collection agencies. 

It is permissible, however, to explain that a "soft" credit check may not affect the customer's credit score, where that is in fact the case.

BNPL is not "free" if any fees are payable in any circumstances. 

Claims cannot be qualified in a way that contradicts the claim being made.

Ads for financial products must state the nature of the contract, any limitation, expense, penalty or charge and the terms of withdrawal. 

If the ad is brief, consumers should be directed to a page with all the relevant information (NB: this conflicts with FCA requirements that regulated consumer credit advertisements must be 'standalone compliant' - i.e. show all the required information, e.g. using a screenshot).

Where BNPL is offered during checkout: 

• it should be explicitly clear to customers (not disguised as means of entering card details as if paying by card immediately
• other available payment methods should be obvious.
• all relevant information must be set out on the page (not via a link).

This post is for information purposes only and is not legal advice and should not be relied upon as such.  Please let me know if you do need advice.