This Christmas season, consumers who use “buy now, pay later” to fund gifts may be in for an unpleasant surprise: returns may be more difficult than when paying with cash or credit card.
According to a September 2022 report from the Consumer Financial Protection Bureau, returns and disputes are significant concerns among BNPL users, and dispute resolution is the top purchase now, pay later-related complaint in the CFPB’s Consumer Complaint Database.
However, a seamless return with BNPL is not difficult if you are familiar with the procedure. Regardless of whether you purchased or received the present, you must return it to the shop and, if required, follow up with the buy now, pay later supplier.
What you should know about buy-now-pay-later refunds
When you use a buy now, pay later provider such as Afterpay, Affirm, or Klarna, you choose to divide your purchase into smaller, frequently interest-free installments, while the provider pays for the item in full.
This means that when you return an item, the reimbursement is sent to the BNPL supplier. The provider is responsible for applying the return to your account, and there is typically a delay.
Due to the short turnarounds of BNPL loans – payments are due every two weeks on ordinary pay-in-four loans — you may be unable to avoid making payments on a returned gift.
Additionally, the industry is mostly uncontrolled. Compared to other financing products, clients have fewer rights if an item goes missing or arrives damaged.
“Returns can be difficult with purchase now, pay later since credit card dispute provisions may not exist in the BNPL area,” said Laura Udis, senior program manager of small dollar, marketplace, and installment lending at the CFPB.
Udis notes that some suppliers offer protections freely. For example, PayPal and Klarna have formal protection provisions that may boost the probability of a refund.
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According to Klarna, its buyer protection policy was created to ensure consumers that shopping via the app is secure.
Kristina Elkhazin, head of Klarna North America, said in an email, “If items are not delivered or if they are defective, we have a clear method to help shoppers resolve any issue and ensure that no client is unjustifiably liable to pay for a transaction.”
However, returns are ultimately subject to the business’s policy, and consumers should prioritize obtaining store approval for returns prior to contacting the purchase now, pay later supplier.
Ways to generate a buy now, pay later profit
Follow these procedures if you need to return a Christmas present purchased with buy now, pay later.
— Examine the return procedure of the BNPL provider: Most providers maintain a website that describes the process, which varies depending on the provider. Learn about the return process and timeline.
— Return the present to the merchant. Providers will lead you to the retailer first; thus, examine the retailer’s return policy. If possible, return online purchases in person to avoid losing the item in the mail. Bring pertinent documentation, such as a receipt or confirmation email. Depending on the store’s policies, you may be able to make an exchange or earn store credit without a receipt.
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Keep records of all transactions, including returns, exchanges, and store credit granted. If you shipped a return, you should obtain a tracking number. Maintain a record of all communications with the store.
• Communicate with the BNPL provider. Some providers may need you to record a return on their website or app, while others do not require any action on your part.
Continue making payments: After returning the gift, continue paying off your loan. Refunds can take some time, and if you miss a payment, you may incur late fees or other penalties. After a return, some suppliers, such as Afterpay, may allow you to defer a payment.
If your purchase has not been returned within a reasonable amount of time — ranging from a few days to several weeks, depending on the BNPL provider — contact the provider’s customer service department for further information. Consider filing a dispute with the supplier if the store refuses to accept your return. This could involve signing into your account and completing an online form.
The Associated Press received this article from the personal finance website NerdWallet. Jackie Veling writes for NerdWallet.
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