On 2 December 2020, the Committee of Advertising Practice (CAP) published its Guidance on the advertising of delayed payment services which includes unregulated credit such as Buy Now Pay Later. The guidance is relevant to the delayed payment providers, as well as the merchants incorporating delayed payment services into their online checkout. Advertisers are expected to swiftly align their practices to comply with this new guidance and have until 2 March 2021 to do so, after this date matters of non-compliance will be dealt with in a formal manner.
The guidance aims to prevent marketing communications for delayed payment services from misleading customers. The overarching principle is that, prior to deciding to use the delayed payment service, customers should have sufficient information to understand what the service is (i.e. credit), the significant conditions or unusual terms, how they should settle their balance and what penalties or fees they may be subject to.
The guidance is relevant to all forms of marketing communications for delayed payment services and in brief requires these types of communications to:
- Be clear that delayed payments are a form of credit;
- Explain the credit checks that may be undertaken by the provider and the consequences on customers credit scores;
- Not imply that the delayed payment service is suitable for all customers or that it is risk free credit;
- Ensure that free claims are qualified if there are associated fees such as late payment fees; and
- State the nature of the contract offered, any limitation, expense, penalty or charge and withdrawal terms, unless the advert is brief or general in scope and this information is freely available prior to using the service i.e. by including a link to full terms.
Where a delayed payment service is presented at an online checkout, all the payment options should be clear to customers and obvious that standard forms of payment are available, as well as the delayed payment option and access should be given to the full terms and conditions of the service, including consequences for late or missed payments. A link to these can be used provided that it is in the section of the checkout process that offers the delayed payment service. Significant conditions or qualifications, including fees, penalties, and payment schedules should be made clear as part of the checkout process and not just through a link to terms.
For further information please contact Louise Neave or Sophie Lessar.