Fury as Love Island stars plug 'buy now, pay later' site Klarna getting Brits into debt12/11/2020
BROKE Josh Stinchcombe can’t afford Christmas presents this year after falling into the “buy now, pay later” debt trap blighting the nation.
The 21-year-old, who is down to just £20 in his bank account, put £200 on the credit service Klarna to buy a suit for an IT job interview.
But he could not afford to pay it back and had debt collectors chasing him.
It is a familiar story, with seven million of us using buy-now-pay-later to fund Christmas after a Covid-hit year, according to Compare The Market.
Josh, whose debts totalled more than £2,000 including loans, believes celebs such as Love Islanders Anna Vakili and India Reynolds should feel guilty for promoting Klarna while their fans get into debt.
He said: “It’s Christmas but I’ve told everyone they’re not getting anything from me this year.”
Josh feels the Love Island stars are “glorifying getting people to borrow more than they can pay back.”
One 23-year-old woman who racked up £12,500 of shopping debt said: “I felt I had to keep up with designer clothes and handbags to look good on social media.”
This week, consumer experts at Which? called for firms such as Klarna to be regulated like banks.
Klarna has ten million UK customers, bagging three million since lockdown in March.
More than half of 18 to 24-year-olds use some form of buy-now-pay-later service.
Many high-street stores offer the service too, including Marks & Spencer, H&M, Uniqlo, River Island and H Samuel, as well as online shops such as Asos.
Small stores, garden centres and even hairdressers are getting in on the act too.
Retailers love it because shoppers spend up to 68 per cent more if they choose to pay later, market leader Klarna says.
Klarna is the biggest shopping phenomenon to come out of Sweden since Ikea but it is creating even more of a headache than making flatpack furniture.
Its slogan boasts: “Buy now and pay later, so you can get what you love today.”
But if you don’t, can’t or forget to make all payments within three months, your debt is referred to a collection agency.
One in ten buy-now-pay-later customers are hit by late fees, according to Which?.
Klarna does not charge fees, but similar products by Clearpay come with late fees of up to £36. PayPal charges £12.
Josh, from Gloucester, said: “I was 19 and wanted to look smart for a job interview, so I put £200 of clothes on Klarna.
"They could see I had a bad credit score but — irresponsibly — offered me money.
“I got paid three days ago and I’m down to £20 in my account.
“Even Covid and Christmas should not persuade you to take credit unless you are certain you can pay it back.”
These latest buy-now-pay-later schemes allow customers to take out credit in one click without a full check, unlike with credit cards or loans, which need complete assessments to determine if a person is able to repay.
Klarna does a lower-level credit check and says failing to pay back debt does not affect a customer’s credit rating.
But critics accuse Klarna of throwing money at young people who cannot get other credit, starting a debt spiral blighting their adult life.
Some customers say they did not even realise they were signing up for credit when they clicked on the Klarna logo, thinking it was a payment provider like PayPal.
Others say they did not receive reminders about payments or insist that Klarna would not return phone calls.
Buy-now-pay-later is currently unregulated but the Financial Conduct Authority is planning a crackdown.
A spokesperson for the Financial Wellness Group, which advised Josh on his debts, said: “Buy-now-pay-later products are targeted at young consumers at the point of purchase, with little time to consider the pros and cons of paying later.”
Alice Tapper, who runs the #KlarNAA campaign, added: “Christmas shoppers using buy-now-pay-later are storing up trouble for the New Year.
“A perfect storm of problems is being created by the buy-now- pay-later mindset, the economic climate and lack of regulation, meaning there is no guidance on how products should be advertised and little consumer protection.”
Asked about the risk of customers getting into spiralling debt, a Klarna spokesman said: “We take this very seriously, especially during Covid.
"Every time a customer chooses to pay by Klarna, we do a soft credit check, determining (their) credit-worthiness.
“For customers who do not pay within the timeframe, we communicate to remind them and if the debt remains unpaid for several months, turn it over to debt collectors to contact the customer.
“Interest or fees are never added. Your credit score will not be impacted, even if you fail to pay on time.”
FAMILIES have been able to save dough by making their own.
A third of adults have baked bread at home during the pandemic, reveals Lakeland’s annual trends report.
And home bakers have made their loaves by hand rather than using a bread maker.
Bakers made, on average, two loaves a week, with around 15 per cent baking four or more loaves.
Lakeland said: “Most home bakers were keen on baking the old-school way, either using yeast and kneading and shaping it themselves (44%), or using a starter to make sourdough (36%). Just 19% relied on a bread machine.”
When PayPal is your enemy
By Ashley Smart, head of fraud at TSB
FRAUDSTERS target PayPal users all the time.
But I’m seeing a big spike in this type of fraud as we tick items off our Christmas list.
One devastated customer has just been defrauded via a classic PayPal scam, losing hundreds of pounds she had set aside for her children’s presents.
We stepped in to make sure there won’t be tears on Christmas morning – but if you are sending money to pay for something, don’t be talked into choosing the “pay a person” option instead of paying for goods and services.
A fraudster will give you a great reason – and often a discount – but you will be losing any protection and getting your money back will be all but impossible.
Watch out for “account problem” emails from fake PayPal accounts.
These will look authentic and might say your account is being audited or certain details have expired.
Clicking the link will hand your personal information – and sometimes the keys to your account – to a criminal.
If you have any concerns about your account, go there yourself and log in normally. Any issues will be displayed there, safely.
Fraudsters also target sellers on the likes of eBay and Gumtree with PayPal scams.
If you are expecting a payment, don’t trust the email confirmations. They can be easily faked.
And never click on a link in a confirmation email to verify a transaction, as the website can also be faked. Instead, log directly into your PayPal account, or use the app.
A friend of mine was caught out with this last week – and sent £400 of goods without seeing a penny back.
AMERICAN Express credit cardholders can get £5 back when they spend £10 or more at participating small shops and businesses.
You can only take advantage of the offer once from each outlet but can use it ten times in total.
Register for the cashback offer, which runs until December 22, at americanexpress.com.
Money test: Boxt
NOTHING says 2020 like your boiler breaking just before Christmas.
But if you were thinking of making your home “smart”, it could be a blessing.
Boxt’s next-day smart home installation service lets you pick gadgets like thermostats or security cameras and have the firm set them up, with a new boiler, within 24 hours.
So can Boxt make your home a toasty, energy-efficient haven in a day? Read on to find out…
WINTER is here and, of course, our boiler decided to quit.
It was a system boiler – one with a separate hot water tank – and I was looking into switching to a combi boiler that heats the water on demand so we could free up the space in our airing cupboard.
As I started piling on the jumpers, I was dreading the hours of Googling local tradespeople and getting quotes so I tried British Gas.
Its online quote was pretty pricey at £3,385 to switch to combi and I had to schedule an appointment with an adviser before I could even book an installation.
Then I saw an ad for Boxt. It promised a free quote within 90 seconds and next-day installation if I ordered before 3pm.
Given how cold I was, I would have paid virtually any price for this option.
The other thing I liked the sound of was its connected home upgrade.
I could upgrade to a smart thermostat and add a range of smart devices such as a Nest smoke alarm or an indoor camera with any boiler – and the company would install it all for me.
I figured there would be a catch, such as inflated pricing, but the Nest thermostat with stand and installation was £180 – £74 cheaper than in the shops. That’s without the cost of getting a tradesman out to fit it.
That was for the thermostat to work with a combi.
If I were to keep my system boiler, it would cost £295. It seemed odd it would cost more but the helpful rep on the Boxt online chat told me this was because it was more fiddly to fit with a system boiler.
I decided against getting a combi, but rather to stay with a system boiler because I am known to take very hot and very long showers.
The next day, a courier dropped off the gear and soon afterwards the engineer arrived.
Within five hours (or five cups of tea) it was all done.
He set up all of my new smart gadgets and patiently explained how they work. It was like having my own expert to quiz.
From the live chat to the engineer, everyone from Boxt was a pleasure to work with – stellar customer service.
The new boiler is working great and on cold mornings I can turn my heating on extra early with my voice
The Nest cam is handy for keeping an eye on my dog while I’m out.
VODAFONE has loads of free Christmas treats up for grabs all this month through the VeryMe Rewards scheme on its app.
The freebies include a mince pie from Greggs, a Candy Kittens sweet bundle and a movie rental from streaming service Chili.
Some you can gift to friends or family, regardless of their mobile network.
Maddy Tooke, coupon queen
MY top five freebies this week are:
- Kids under 16 get a free meal in Asda cafes this month if accompanied by an adult. Tier 3 areas have free meals to take away. bit.ly/asdakidsfree
- Free financial e-learning for primary and secondary teachers from Young Enterprise in partnership with Martin Lewis. bit.ly/financeelearning
- Free Cif Ecorefill. Enter your details at bit.ly/cifecorefill to claim.
- Free Lindt Lindor bar 38g, orange or mint, from Lindt stores. Just show the Lindt Instagram post bit.ly/freelindt at the till in store. While stocks last.
- Morrisons is giving away bags of wonky “carrots for Rudolph” on December 19. In store only. bit.ly/freecarrotsforrudolph2020
Top 10 deals
- Get 30 per cent off orders over £5 at card retailer Scribbler. Use code SPEND5GET30OFF by tomorrow. bit.ly/scribbler30
- Save ten per cent on online orders over £35 at Co-op Food. Offer ends December 24. bit.ly/coop10food
- Get £5 off orders over £30 or £20 off orders over £80 from Hotel Chocolat before December 21. bit.ly/20hotelchocolat
- Get 16 per cent off diamond rings at Goldsmiths until Wednesday. Save 20 per cent on wedding rings until Monday. bit.ly/goldsmithswedding20
- Save an extra ten per cent off all discounted lines at Ben Sherman until December 20. bit.ly/bensherman10
- Get 20 per cent off when you spend £65 at ShopDisney by tomorrow. bit.ly/quidcodisney
- Free No7 Shimmer All Night Palette, worth £35, when you buy two No7 cosmetics, accessories or bath and body products at Boots. Available while stocks last so get it quick. bit.ly/no7freepalatte
- Free Pandora bracelet worth £65 when you spend £99 or more on jewellery until Thursday. bit.ly/pandorafree65
- Get 20 per cent off Paperchase orders until December 19. bit.ly/paperchase20vc
- Save 25 per cent when you buy six or more bottles of wine, prosecco and champagne from Sainsbury’s. Expires tomorrow. bit.ly/sainsburys6wine
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