In December the Committee of Advertising Practice (CAP) published new guidance on marketing communications for delayed payment services. This specifically relates to those services not regulated by the FCA. The guidance covers those services which:
- charge no interest (but may have late payment charges)
- allow consumers to defer payment for goods by paying the provider the full amount after a set period of time and/or paying in instalments and
- are part of the online checkout process, regarded as a marketing communication regulated under the CAP Code
In particular, it advises marketers on how to ensure that consumers understand the service being offered, and in particular that it comprises a form of credit, so they are not misled. The overarching principle is that before deciding to use the delayed payment service, consumers should have sufficient information to understand what the service is, how they are expected to settle their balance, and what penalties or fees they may be subject to. Any significant conditions should be sufficiently prominent.
The Guidance covers the following key points:
- The ad must make clear that delayed payments are a form of credit, bearing in mind that these services are likely to appeal to a younger population, who may not appreciate the potential for late payment fees or the impact on their credit score
- Suitability – marketing communications should not imply that they are suitable for all customers or a risk-free way of obtaining credit.
- Terms and conditions – before deciding to use a delayed payment service, customers must be able to easily access the full terms and conditions of the service. Any particularly significant conditions or qualifications, including fees, penalties, and payment schedules should be made clear in the checkout process itself, not via a link to the terms.
- Where delayed payment services are provided at checkout, their nature should be made explicitly clear to customers. It should also be obvious that standard forms of payment are available.