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Consumer watchdog wants more protection for 'buy now, pay later' users after 18 complaints in 18 months

SINGAPORE — The consumer watchdog has called for more protection for "buy now, pay later" (BNPL) service users after receiving 18 complaints in the past one-and-a-half years over technical issues with payments and inability of consumers to seek refunds.
"Buy now, pay later" services allow consumers to make purchases without making the full payment upfront, instead paying gradually for the purchase over the next few months.
"Buy now, pay later" services allow consumers to make purchases without making the full payment upfront, instead paying gradually for the purchase over the next few months.

SINGAPORE — The consumer watchdog has called for more protection for "buy now, pay later" (BNPL) service users after receiving 18 complaints in the past one-and-a-half years over technical issues with payments and inability of consumers to seek refunds.

In an article posted on its website on Friday (June 24), the Consumers Association of Singapore (Case) cautioned that BNPL services may lead to consumers spending beyond their means and making impulsive purchases, due to a false perception of increased purchasing power.

BNPL services allow consumers to make purchases without making the full payment upfront, instead paying gradually for the purchase over the next few months.

“Limits should be set on both consumers and BNPL providers,” said Case president Melvin Yong, who authored the article.

Mr Yong proposed a series of recommendations in the article, including setting purchase and penalty limits, regulations on BNPL advertisements, inclusion of BNPL-related spending data in consumers’ credit ratings and providing clear recourse avenues.

A 2021 report by consumer research and analytics firm Milieu had shown that close to a fifth of Singaporeans aged 16 and above have used a BNPL service.

“Consumers should be allowed to set purchase limits for themselves, to guard against excessive and untenable monthly instalments.

“There should also be a corresponding limit on the maximum quantum of penalty charges that BNPL providers can levy on consumers, to prevent defaults,” said Mr Yong.

With advertisements for BNPL services being commonplace online, such as on social media sites, Mr Yong called for more regulations on such ads.

He said the risks involved in using the service should be made clearly known to consumers by prominently displaying the total amount that consumers would have to pay should they default on their instalments.

The article also recommended that purchase limits be set for first-time BNPL users and those with poor credit ratings.

Mr Yong said a mandatory ceiling (such as S$500 a month) on maximum purchases allowed for users aged below 21 is needed as most young consumers aged 18 to 21 do not earn an income.

As the complaints the consumer watchdog has received on BNPL services over the past 18 months have included cases of consumers being unable to seek refunds, Mr Yong also recommended for recourse avenues to be made clear to consumers before they agree to use the service.

An example of such would be making it known to the consumer whether the dispute will be resolved by the service providers or the merchants.

The consumer watchdog also advised members of the public to exercise diligence in deciding between needs and wants, setting reminders and money every month to pay for instalments, and understanding the terms and conditions of service before using it.

“Case will continue to work with MAS and the BNPL Working Group to ensure that consumers are protected when using BNPL services, and to ensure that BNPL does not come to mean 'Buy Now, Pain Later',” said Mr Yong, referring to Monetary Authority of Singapore.

'ULTIMATE AIM OF PROTECTING CONSUMERS' INTEREST'

In response to TODAY's queries, the Singapore FinTech Association said a code of conduct for the BNPL industry is being developed by the working group set up earlier this year.

“While developing the code, the working group continues to consider the variegated views of stakeholders, including Case, while comprehensively addressing concerns from stakeholders, with the ultimate aim of protecting consumers' interest through the code,” said Mr Shadab Taiyabi, the president of the Singapore FinTech Association.

The BNPL code of conduct is set to be released by the third quarter of this year, he added.

Hoolah, one of the BNPL service providers in Singapore, told TODAY it is working with the Singapore FinTech Association and industry members on the BNPL code of conduct as part of the working group.

The code of conduct will hold all BNPL players in Singapore to the highest ethical and professional standards, while ensuring that industry trust and consumer safety are protected, said Hoolah chief executive and co-founder Arvin Singh.

TODAY has also reached out to BNPL service providers Grab, Atome and Pace for comments.

 

 

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Case consumer watchdog buy now pay later BNPL

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