Shoppers who used buy-now-pay-later to help finance gifts this holiday season may soon be in for an unwelcome surprise: Returns may be more challenging than when they shop in-store with cash or a credit card.
Returns and disputes are common concerns among buy-now, pay-later customers, according to a September 2022 report by the Consumer Financial Protection Bureau, and dispute resolution is the top buy-now-pay-later complaint in the CFPB’s consumer complaint database .
But getting a seamless buy-now-pay-later return isn’t impossible if you know the process ahead of time. Whether it’s a gift you bought or received, you’ll want to make arrangements with the seller on the return and proceed with the purchase now, pay the supplier later, if necessary.
What you need to know about Buy Now Pay Later
When you use a bui nov pay later provider, such as Afterpay, Affirm or Klarna, you decide to split your total purchase into smaller installments, often without interest, while the provider pays in full on your behalf.
This means that when you make a refund, the refund goes to the buy now, pay later supplier. It is up to the supplier to apply the refund to your account and there is usually a delay.
Because buy-now, pay-later loans have quick turnarounds—payments are due every two weeks for standard payday loans—you could be stuck paying for a gift that’s been returned.
The industry also remains largely unregulated. If a package goes missing or arrives damaged, consumers have less protection compared to other financial products.
“Refunds can be a challenge with buy now, pay later because there are specific dispute provisions that apply to credit cards that may not exist in the BNPL space depending on the lender,” says Laura Udis, senior program manager for small dollars, marketplace and lending on installments with the CFPB.
Udis points out that some providers offer protection voluntarily. PayPal and Klarna, for example, have formal protection policies, which can increase the likelihood of refunds.
According to Klarna, its customer protection policy is in place to ensure customers can shop safely using the app.
“If goods have not been delivered or if something is wrong with them, we have a clear process to help customers resolve any issues and ensure that no customer is unduly obligated to pay for a purchase,” Christina Elkhazin, head of Klarna North America, said in email.
However, returns are ultimately subject to store policy, and customers should prioritize obtaining in-store return approval before contacting the buy now and supplier later.
Steps to buy now, pay later return
If you need to return a holiday gift you purchased with Shop Now, Pay Later, follow these steps.
1) Check the “Buy Now, Pay Later” supplier return process:
Most providers maintain a website that explains the process, which may vary from provider to provider. Find out what to expect with your refund and timeline.
2) Return the gift to the store:
Providers will direct you to the retailer first, so check the store’s return policy. If possible, return online orders in person to avoid the risk of the item being lost in the mail. Bring relevant documents such as a receipt or email confirmation. If you don’t have a receipt, you may be able to make an exchange or receive store credit, depending on the store’s policy.
3) Keep records:
Keep copies of all transactions, including returns, exchanges or issued store credit. If you sent a return, get a tracking number. Keep a log of communication with the store.
4) Continue with a “Buy Now, Pay Later” supplier:
Some providers may require you to report a return on their website or app, while others require no action on your part.
5) Continue to pay:
Once you return the gift, continue paying off your loan. Refunds may take time, and if you miss a payment, you may be charged a late fee or other penalty. Some providers, such as Afterpay, may allow you to delay payment after you’ve made a refund.
6) Potentially file a dispute:
If your purchase is not refunded in a timely manner – from a few days to a few weeks depending on the buy now, pay later supplier – contact the supplier’s customer service department for more information. If the store does not accept your return, consider filing a dispute with the supplier. This may mean logging into your account and filling out an online form.
By Jackie Welling of NerdWallet
The Epoch Times Copyright © 2022 Views and opinions expressed belong to the authors. They are intended for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning or any other personal finance advice. The Epoch Times assumes no responsibility for the accuracy or timeliness of the information provided.