Buy Now Pay Later Deals - Don't Leave it too Late

Don’t get caught out by missing the end of the interest-free payment period on Buy Now Pay Later deals.

That is the warning from the Trading Standards Service (TSS) part of the Department of Enterprise, Trade and Investment, following complaints from consumers who were not informed by lenders of the impending closing date of the interest-free offer, and who now face high interest repayments.

Buy Now Pay Later deals offer consumers the opportunity to defer paying the cash price for a specified period, most commonly 12 months. If full payment is not made within this time, interest charges will apply.

Kevin McNamara of TSS said: “In these credit crunch times, a Buy Now Pay Later deal can seem a good way to spread the cost, provided the cash price is paid on time.

“While most lenders remind their customers that the interest-free period is coming to an end, there are those who do not. The result can be that consumers who fully intended to pay the cash price, miss the final date for payment, and end up being liable for substantial interest payments.”

The Trading Standards Service has received numerous complaints from consumers who have been caught out in this way.

Kevin McNamara said: “In some cases, complainants who had purchased goods at a cost of £1,000 or more, ended up paying as much again in interest at an annual percentage rate (APR) of 30%. This was simply as a result of missing the interest-free offer payment date by only one day.”

Kevin continued: “While there is no legal requirement for lenders to issue reminders to consumers as they approach the end of the interest-free period, the Financial Ombudsman Service (FOS) recently ruled in favour of a consumer, when a lender failed to remind him that his initial interest-free period was coming to an end.

“The FOS felt that as it is well established industry practice to give reminders, it was reasonable for the consumer in this case to have expected such a reminder.”

Kevin offers this advice: “Consumers who feel they missed their cash payment date due to the failure of the lender to issue a reminder, should first of all complain to the lender about this. Then, if the complaint is not resolved to their satisfaction, they can refer their case to the FOS.”

Should consumers have a complaint about ‘Buy Now, Pay Later’ deals or require further advice, they should contact Consumerline on tel: 0845 600 62 62 or tel: 028 9025 3900, or alternatively online at www.consumerline.org.

Notes to Editors:

1. The APR (the annual percentage rate of charge) is an important piece of information for consumers shopping around for credit. It provides a yardstick for measuring the cost of credit under different types of agreement as, in addition to interest charges, the APR reflects any other charges that have to be paid to obtain the credit, even if they do not arise directly under the credit agreement.
2. For details of the decision taken by the Financial Ombudsman Service see http://www.financial-ombudsman.org.uk/publications/ombudsman-news/75/75-consumer-credit.html
3. For media enquiries please contact the DETI Press Office, telephone 028 9052 9297. Outside office hours, please contact the Duty Press Officer via pager number 07699 715 440 and your call will be returned.