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18 Mar 2022

JD Sports retailers offering incentives to use 'buy now, pay later' schemes

Which? uncovers a trend in JD Sports-owned retailers offering free delivery to shoppers if they opt to 'pay later' at the checkout

JD Sports-owned retailers have been incentivising shoppers to use 'buy now, pay later' (BNPL) schemes at the checkout.

The online retailers, JD Sports, Size and Tessuti, have all run promotions in the past year offering deals for free standard or express delivery if you pay using a 'pay later' option at the checkout.

BNPL schemes, such as Klarna, Laybuy and Clearpay, are a form of credit, allowing you to order items and pay for them at a later date or in instalments, interest-free.

But Which? is concerned about retailers incentivising the use of BNPL, as our research has indicated that many shoppers don't fully understand the risks of choosing a BNPL option at the checkout.

Here, we reveal the promotions, what the advertising regulator told us about them, and explain how to shop safely with BNPL schemes.

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Free delivery in exchange for BNPL debt

JD Sports, Size and Tessuti have all run promotions within the past year incentivising shoppers to pay with a BNPL scheme for free delivery.

A large banner on JD Sports' homepage in September 2021 offered free express delivery to those paying with Laybuy. This promotion then ran again in January 2022, with Laybuy also promoting the deal in its newsletter.

Laybuy isn't the only BNPL firm engaging in these types of deals - in December 2021, JD Sports also offered free express delivery to those who paid with Klarna.

Tessuti - another online fashion retailer owned by JD Sports - ran a similar promotion for free standard delivery when paying with Klarna.

And JD Sports-owned footwear retailer, Size?, offered free delivery to those who paid with Clearpay back in June 2021.

While avoiding delivery fees might sound appealing, it's important to understand the risks of taking out credit before using a BNPL scheme - missed repayments can lead to late fees, marked credit scores and you could even be referred to a debt collection agency.

Late fees from Laybuy and Clearpay, for example, cost an initial £6 - which is likely to be more than the cost of standard delivery to begin with.

Alongside BNPL promotions, Which? has also expressed concern that shoppers are being bombarded with BNPL schemes when shopping online.

Our research into 111 of the biggest online retailers found that more than half (62 out of 111) of fashion, baby and child, and homeware retailers offer at least one BNPL scheme - and JD Sports was the retailer offering the highest number of BNPL schemes, amounting to six in total.

The ASA looking into BNPL ads

Which? sent these promotions to the Advertising Standards Authority (ASA) who told us they're currently looking into BNPL schemes.

The ASA's guidance for delayed payment services, such as BNPL schemes, requires advertisers to make it clear that these types of payment options are a form of credit with potential risks if repayments are missed.

Which? also looked at the ASA's separate guidance for short-term and payday loans. Though BNPL schemes do not fall into this category, the ASA told us that some of the principles - such as not trivialising the process of taking out credit - apply to other financial products too.

'As a stating point, all financial ads should be responsible and that includes not trivialising the decision to take out credit,' the ASA told us.

This guidance for short term and payday loans also states that 'the use of flippant imagery and language can also be seen as trivialising the process.'

We're concerned that some of JD Sports' promotions could be trivialising the use of BNPL schemes - using emojis and language such as 'hate waiting for delivery but want new garms?' to promote their deals.

What does JD Sports say?

JD Sports told us it wants to give customers a choice of payment options to they can decide what works best for them.

It said it lists all the options clearly with a prominent link to T&Cs, as well as including common FAQs and contact information for each payment provider.

What do the BNPL schemes say?

A Clearpay spokesperson said: 'Like many retailers and payment providers, from time to time Clearpay partners with merchants to run promotions that offer additional value for our customers. When doing this, we comply with ASA rules and guidance in promoting our service, and we always ensure that our disclaimers are clear before customers check out their purchases.'

The scheme also confirmed it doesn't have any free delivery style promotions running at the time of writing.

Klarna told us these promotions, funded by Klarna, help its loyal customers save money regardless of whether they pay immediately and in full using Klarna or 'pay later'. To support responsible spending, Klarna has strict eligibility assessments on each purchase to only lend to those who can afford to repay.

A Klarna spokesperson also said: 'We have taken a leading position within the industry to set appropriate and clear advertising standards with expert legal advice, which we believe accurately reflects the CAP's guidance. We provide all our retail partners with guidelines and resources on these advertising standards in order to drive responsible marketing practices and so that every customer fully understands how our payment options work before making their choice. We have a dedicated team to ensure these guidelines are met.'

Laybuy told us on occasion it works with merchant partners to provide exclusive deals to its customers. This is part of its normal marketing and promotional activity and aims to give something extra to its customers.

It also told us it's aware of ensuring its customers aren't being encouraged to take on debt they can't afford. Before taking advantage of any exclusive Laybuy deals, the shoppers must have signed up to be a Laybuy customer which means they'll have been credit checked and have a structured repayment plan with a strict credit limit set.

How to shop safely with BNPL

Before signing up to a BNPL scheme, it's important to ensure you know how it works and that it's the right option for you.

If you decide to use one, follow our steps for ensuring it's a smooth experience.

  • Set up alerts for repayments in your diary or on your phone so you know exactly what to pay back and when. This is particularly useful if you have a number of different repayments to make.
  • Draw up a budget so you know how much money you're paying back each month, and how much money you can spend. Don't be tempted to spend more to max your credit limit and make sure you'll be able to repay the amount within the agreed timeframe.
  • Don't overextend your other borrowing - think carefully about whether you'll be able to meet current BNPL repayments before applying for credit from other providers.
  • Make any returns promptly so you don't end up making repayments for something that you want to send back. We've heard from some BNPL users that refunds can take longer to process if you've paid with a pay later scheme - so it's worth sending your items back asap.
  • Contact the BNPL scheme if you think you might miss a repayment - some schemes allow you to snooze or freeze repayments.

Had a problem with a BNPL scheme? You can share your experience using our form.