Shoppers are at risk from online retailers with returns policies that flout consumer law, according to an investigation by Which?
The consumer group found scores of online retailers with returns policies in breach of consumer law offering buy now, pay later (BNPL) and other payment options, putting shoppers at risk of losing their money if they want to send back unwanted or faulty goods.
It found more than 170 online retailers, listed on Klarna, Clearpay or Laybuy’s apps or websites, that were displaying incorrect returns or faulty goods policies.
Retailers also offered other payment methods at the checkout, such as PayPal, Apple Pay, Google Pay and Amazon Pay, as well as letting customers pay directly with debit or credit cards, Which? said.
It said while BNPL services offer speed and convenience at checkouts, they, like debit cards, do not give consumers the same protections as those paying between £100 and £30,000 using their credit card.
Which? said many retailers it looked at refused refunds on full-priced, non-faulty or sale items, offering store credit or exchanges instead.
Some of the retailers gave shoppers 14 days or fewer to send back an unwanted item, while others charged “restocking” or “administration” fees for returns, which could be as high as 20% of the price of the unwanted items.
The consumer group said this is contrary to the Consumer Contracts Regulations, which gives consumers the right to cancel orders for most goods bought online within 14 days of receiving the item.
These rules apply to items bought in a sale or on discount too, and shoppers should not be charged to make a return.
Hi. If your item was bought online, over the phone or by mail order, as a customer you have consumer returns rights under the Consumer Contracts Regulations. https://t.co/kh8tVJ7grI
We also have a letter tool page here which might be useful for you: https://t.co/oL4qQO5I6Y
— Which? Money (@WhichMoney) April 30, 2020
Which? also found some retailers had incorrect faulty goods policies that could leave customers stuck with items that are not fit for purpose.
Some retailers were not giving customers long enough to detect or report a fault with a product, with some asking for faults to be reported within a few days of the order being received.
This is in breach of the Consumer Rights Act, which gives consumers 30 days to notice a fault with a product and get a refund, repair or replacement.
After 30 days, they could still be entitled to a refund, repair or replacement if the item is faulty and in some cases, a further right to reject.
Customers could find themselves stuck with faulty goods and having to continue paying for them under BNPL schemes, Which? said.
Which? is writing to all 170 retailers where it found issues, urging them to change their policies in line with UK consumer law.
Separately, Which? is calling for unregulated BNPL products to become regulated by the Financial Conduct Authority (FCA) after it found that nearly a quarter (24%) of BNPL customers were encouraged to spend more than they could afford.
Our research has found concerning practices encouraging people to spend more than they planned to using ‘buy now, pay later.’ https://t.co/qBDw2zGXMM
— Which? Money (@WhichMoney) January 13, 2021
Adam French, Which? consumer rights expert said: “Many consumers could be lulled into a false sense of security by the convenience and familiarity of buy now, pay later. Online shoppers must not assume that a retailer is reliable just because it offers BNPL at the checkout.
“Given that many people’s finances are stretched now more than ever, we believe that the FCA needs to regulate the BNPL market to ensure there are more protections in place for consumers to avoid these costly situations.”
Which? said in one case, a BNPL customer was left disputing a payment with Klarna after she shopped with a fraudulent website that has since been taken down.
“When I saw the site offered Klarna payments, I didn’t even think to go on Trustpilot to check them out,” she said.
“You assume the company is credible if they’re running these kinds of financing options.”
The customer got a full refund from Klarna but has changed her shopping habits.
“I wouldn’t use Klarna for any retailer other than well-known high street stores now,” she said.
Klarna told Which?: “At Klarna we support regulation of the sector. It is vital that regulation is updated for the digital age, to ensure that consumers are protected regardless of which provider they choose.
“We carefully underwrite any potential partner before any onboarding or approval is confirmed.”
Clearpay said: “We take the protection and safety of our customers extremely seriously and encourage users to contact our customer service immediately if they are concerned about a retailer.”
Laybuy said: “Refunds via Laybuy are subject to each merchant’s refund policy.”
Amazon said: “We guarantee purchases from merchants when a customer uses Amazon Pay for qualified purchases on third party websites.”
Google said: “Google Pay provides a seamless transaction experience and we strive to make it as safe as possible for our users.”
Apple told Which? that Apple Pay customers are covered by the same benefits and protections offered by the card they are using to make the payment.
Here are tips from Which? for shopping safely:
1. Research the retailer and watch out for fake reviews.
2. Double check the retailers’ returns and faulty goods policies before buying.
3. If you used BNPL to pay and are struggling to return the item, contact the retailer and the BNPL lender.
4. If you used a credit card or debit card to pay and are struggling to get a refund you may be able to attempt a Section 75 or chargeback claim.