LSB finds consumers lack awareness of BNPL costs

The Lending Standards Board (LSB) has published new research which concludes that consumers do not understand the true costs of Buy-Now, Pay-Later (BNPL) products.

Data showed that:

• Only 52% of BNPL users were aware of late payment fees, and only 50% know roughly how much these fees might be before incurring them;
• 15% of users had incurred late fees, with this figure rising to 22% for those with ‘poor’ or ‘very poor’ credit scores;
• 36% of users only decide to use BNPL at the check-out stage;
• 3/5 of users were unaware that BNPL products are unregulated;
• 34% of British consumers with ‘poor’ or ‘very poor’ credit scores used BNPL, with a further 42% combining BNPL products with credit cards. For all consumers, these figures were just 12% and 33% respectively;
• 65% of monthly BNPL users foresaw needing to access more credit in the next year to cover the rising cost of living, compared to 28% of non-credit users;
• over 35% of users said they often make impulse purchases they later regret, compared to 17% of non-BNPL users.

The LSB flagged that BNPL use increases around Christmas, Black Friday and Cyber Monday, leaving many households struggling with unexpected repayment fees in January.