Buy now, pay later: Your refund rights as Missguided collapses | Buy now, pay later


Buy Now Pay Later (BNPL) have pledged to reimburse shoppers affected by the collapse of fast fashion retailer Missguided.

The online clothing brand went into administration on May 30, owing millions of pounds to its suppliers and leaving customers in the dark about orders and refunds.

Teneo directors are in charge until Frasers Group, the retail empire owned by Sports Direct founder Mike Ashley, takes over in August after a £20m deal.

The site’s low prices – it made headlines in 2019 for selling £1 bikinis – and BNPL options made it popular with shoppers who wanted to try on outfits at home before returning unused clothes. desired.

BNPL allows buyers to purchase items and pay for them in monthly or weekly installments or delay payment of the full balance for 30 days.

Buy now, pay later is popular with shoppers who want to try on outfits at home before returning unwanted clothes.
Photography: Fabrice Lerouge/Getty Images/Onoky

Missguided does not refund, even for items that have already been returned, and customers have been told they will likely get a “small fraction” of what is due to them as part of the administrative process. Teneo did not respond to requests for comment.

Martyn James, media manager at complaints website Resolver, said: “Because companies like Missguided are online, their business model – of ordering clothes to try on and then processing returns – exposes consumers to serious heavy losses if the company goes bankrupt. ”

However, major BNPL companies have confirmed that many of their customers will get their money back and have future payments reversed.

While this is good news for buyers, the unregulated sector has been criticized for allowing customers to get into debt and for lax affordability controls, and should only be used by buyers who can track repayments .

A study by Citizens Advice, published this month, found that more than two in five recent buyers relied on credit cards and other borrowings to pay off their BNPL debt.

The sector is expected to be regulated by the Financial Conduct Authority, but that is unlikely to happen before the end of this year or in 2023.

Will my BNPL lender reimburse me?

The UK’s major BNPL operators say most customers with a valid claim will be able to get a full refund. You can suspend future payments by registering that you have returned items in the BNPL company application or on its website.

Clearpay says customers who don’t receive their purchases or who have returned an item will be refunded or have their debts forgiven. “Our customers will not be in a position where they will be disbursed or lose their legal rights of return,” a spokesperson said.

Klarna, the UK’s largest BNPL operator with millions of customers, says buyers can open a dispute in the “usual way” and will offer refunds where appropriate.

Laybuy, which allows shoppers to spread payments over six weekly installments, says it will offer customers who can show proof of return a full refund.

PayPal, which also offers credit and BNPL options, says all of its customers can request a refund if their purchase doesn’t arrive or doesn’t match the product description.

A smartphone with the PayPal logo is placed on a laptop
Did you use PayPal when purchasing an item? Photo: Dado Ruvic/Reuters

You can process refunds or open disputes by logging into your account with the relevant lender.

It helps if you have proof that you made a return or attempted to contact Missguided.

If the BNPL firm decides not to follow up on your complaint, you cannot refer to the financial mediator but you can possibly obtain a refund via your bank.

What should I do if I still need to return an item?

The Missguided website is currently down for ‘maintenance’ and they are not accepting orders or returns, but it’s always worth complaining to your BNPL supplier if you’re stuck with unwanted items.

Laybuy customers are responsible for payments if they are unable to return, but the company says it will take a “pragmatic approach…especially if the inability to return is likely to cause hardship or hardship. excessive”.

A spokesperson said: “We encourage anyone in this situation to contact our customer service team to discuss their situation so that we can work with them to identify a solution. This could include developing a tailored repayment plan, suspending repayments, or canceling debt.

A pile of credit and debit cards.
If you paid for items by credit card, you have better protection for large orders than BNPL buyers. Photograph: Andrew Matthews/PA

Klarna encourages customers in this situation to open a dispute to allow it to investigate, and Clearpay says it will consider complaints on a “case-by-case” basis.

What are my rights if I paid by debit or credit card?

Credit card customers have better protection for large orders than BNPL buyers, as transactions between £100 and £30,000 are covered by Section 75 of the Consumer Credit Act.

You do not have this protection when using BNPL, even if you used your credit card to pay because it was linked to your BNPL account.

In the meantime, if your order was under £100 or you used a debit card, you’ll need to ask your card provider for a chargeback.

You can only do this after you have already complained to the retailer, and there is a time limit for chargebacks, which differs from bank to bank.

You can also chargeback if you paid with your debit card through a BNPL platform such as Klarna.

However, you must choose to request a refund through your bank or BNPL company first, as you cannot open both disputes at the same time.

If your chargeback request fails, you can appeal the decision to the Financial Ombudsman.

Finally, you can go through the administrative process, but it will probably take months and you will only get part of your money back, if you get anything.

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