FCA takes action on BNPL terms as product use grows

FCA has taken action using its powers under the CRA against potentially unfair terms in unregulated BNPL contracts issued by PayPal and QVC. It said it is particularly important to make sure consumers have the right protections following research that shows an increase in use of BNPL overall, and that also found that frequent users of BNPL are more likely to be in financial difficulties.

FCA’s concerns were:

  • that PayPal’s terms:
    • did not require that it would automatically end its Pay in 3 Plan when the consumer exercised their right to cancel their online purchase within the 14 day cooling off period, so this might have meant some consumers would have continued to pay until PayPal had received the refund from the retailer; and
    • did not clearly explain that the terms created a continuous payment authority (CPA), nor did they explain how consumers could modify or cancel the CPA; and
  • that QVC’s terms, like PayPal’s, did not clearly state that its “Easy Pay” product involved the creation of a CPA, nor did they explain clearly enough how the consumer could modify or cancel.

FCA did not see evidence that either entity had in practice applied these terms harmfully, and both companies have now changed the terms for future use.

Emma Radmore