Millions of shoppers using Buy Now Pay Later (BNPL) services will now be subject to stricter background checks under new rules introduced to protect consumers. BNPL is a loan that allows customers to make purchases in installments.
Although first launched in the UK in 2014, the option has only been regulated since July 2026. Lenders such as Klarna and Clearpay must now carry out stricter background checks to see whether shoppers are able to repay loans, with those failing the checks at risk of being blocked from using the services.
Stronger refund rights for shoppers
That is not the only change. Unlike purchasing items with a credit card or a personal loan, shoppers who pay using the BNPL option typically had fewer rights when seeking a refund.
As well as tougher background checks, shoppers will now receive better protection when it comes to refunds, as the new rules give customers more access and independent rights on complaints should anything go wrong.
Government pledge to protect consumers
Rachel Blake, economic secretary to the Treasury, said: “We made a clear promise to give consumers the protections they deserve and today we are delivering.
“It is not fair that people using these products have had fewer rights than if they had paid by credit card. These new rules protect the consumer — with proper checks before credit is offered, real rights when things go wrong, and support rather than pressure if someone falls into financial difficulty.”
Reducing the risk of unaffordable debt
The new rules will help minimise the risk of people getting into unaffordable debt. By providers carrying out affordability checks before offering credit, this means that no one should be borrowing what they cannot realistically afford to repay.
Additionally, consumers seeking a refund for faulty goods will now have clear, enforceable rights to claim one and anyone who falls into financial difficulty will be directed towards debt advice and support first, rather than being immediately handed to a debt collector.
With BNPL becoming a more popular way to shop, it is important that consumers are being protected and have access to support should they need it.
