Shoppers who used buy now, pay later schemes to help finance gifts this holiday season may soon encounter an unwelcome surprise: Returns can be more challenging than when buying from the store with cash or a credit card.
Returns and disputes are a common concern among buy now, pay later users, according to a September 2022 report from the US Consumer Financial Protection Bureau, and dispute resolution is the top BNPL-related complaint in the CFPB’s consumer complaint database.
But making a seamless return with BNPL is possible if you know the process ahead of time. Whether it is a gift you bought or received, you will want to deal with the retailer when making the return and follow up with the BNPL provider, if necessary.
What to know about BNPL returns
When you use a BNPL provider such as Afterpay, Affirm or Klarna, you are opting to divide your total purchase into smaller, often interest-free instalments while the provider pays in full on your behalf.
That means when you make a return, the refund goes to the BNPL provider. It is up to the provider to apply the refund to your account, and there is usually a lag.
Because BNPL loans have quick turnarounds — payments are due every two weeks on standard pay-in-four loans — you can get stuck making payments on a gift that has been returned.
The industry also remains largely unregulated. If a package goes missing or arrives damaged, consumers have fewer protections compared with other financing products.
“Returns can be a challenge with buy now, pay later because there are specific dispute provisions that apply to credit cards that may not exist in the BNPL space depending on the lender,” says Laura Udis, senior programme manager of small dollar, marketplace and instalment lending at the CFPB.
Ms Udis points out that some providers voluntarily offer protections.
PayPal and Klarna, for example, have formal protection policies, which may increase the likelihood of a refund.
According to Klarna, its buyer protection policy was implemented to reassure shoppers they can safely shop with the app.
“If goods are not delivered or if there is something wrong with them, we have a clear process to help shoppers resolve any issue and ensure that no customer is unjustifiably liable to pay for a purchase,” says Kristina Elkhazin, head of Klarna North America.
However, returns are ultimately subject to the store’s policy, and shoppers should prioritise getting returns approved with the store before contacting the BNPL provider.
Steps to making a BNPL return
If you need to return a holiday gift that was purchased with buy now, pay later, follow these steps.
- Check the BNPL provider’s return process: Most providers maintain a webpage that explains the process, which can vary by provider. Learn what to expect with a refund and timeline.
- Return the gift to the store: Providers will direct you to the retailer first, so check the store’s return policy. If possible, return online orders in person so you don’t risk the item getting lost in the mail. Bring relevant documents such as a receipt or email confirmation. If you do not have a receipt, you may be able to make an exchange or receive store credit, depending on the store’s policy.
- Keep records: Retain copies of all transactions, including returns, exchanges or issued store credit. If you mailed a return, get a tracking number. Keep a log of communications with the store.
- Follow up with the BNPL provider: Some providers may ask you to report a return on their website or app, while others require no action on your end.
- Keep making payments: Once you have returned the gift, keep paying off your loan. Refunds can take a while, and if you miss a payment, you may be charged a late fee or other penalty. Some providers, like Afterpay, may allow you to defer a payment once you have made a return.
- Consider filing a dispute: If your purchase has not been refunded in a timely manner — from a few days to a few weeks, depending on the BNPL provider — contact the provider’s customer service department for more information. If the store isn’t accepting your return, consider filing a dispute with the provider. This may mean logging in to your account and filling out an online form.
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EA Sports FC 25
Developer: EA Vancouver, EA Romania
Publisher: EA Sports
Consoles: Nintendo Switch, PlayStation 4&5, Xbox One and Xbox Series X/S
Rating: 3.5/5
The specs
Engine: 3.0-litre twin-turbo flat-six
Power: 480hp at 6,500rpm
Torque: 570Nm from 2,300-5,000rpm
Transmission: 8-speed dual-clutch auto
Fuel consumption: 10.4L/100km
Price: from Dh547,600
On sale: now
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1 The kind of water athletes drink is important. Gwilym Hooson, a 28-year-old British performer who is currently recovering from knee surgery, found that out when the company was still in Studio City, training for 12 hours a day. “The physio team was like: ‘Why is everyone getting cramps?’ And then they realised we had to add salt and sugar to the water,” he says.
2 A little chocolate is a good thing. “It’s emergency energy,” says Craig Paul Smith, La Perle’s head coach and former Cirque du Soleil performer, gesturing to an almost-empty open box of mini chocolate bars on his desk backstage.
3 Take chances, says Young, who has worked all over the world, including most recently at Dragone’s show in China. “Every time we go out of our comfort zone, we learn a lot about ourselves,” she says.
Like a Fading Shadow
Antonio Muñoz Molina
Translated from the Spanish by Camilo A. Ramirez
Tuskar Rock Press (pp. 310)
DMZ facts
- The DMZ was created as a buffer after the 1950-53 Korean War.
- It runs 248 kilometers across the Korean Peninsula and is 4km wide.
- The zone is jointly overseen by the US-led United Nations Command and North Korea.
- It is littered with an estimated 2 million mines, tank traps, razor wire fences and guard posts.
- Donald Trump and Kim Jong-Un met at a building in Panmunjom, where an armistice was signed to stop the Korean War.
- Panmunjom is 52km north of the Korean capital Seoul and 147km south of Pyongyang, North Korea’s capital.
- Former US president Bill Clinton visited Panmunjom in 1993, while Ronald Reagan visited the DMZ in 1983, George W. Bush in 2002 and Barack Obama visited a nearby military camp in 2012.
- Mr Trump planned to visit in November 2017, but heavy fog that prevented his helicopter from landing.
Wicked: For Good
Director: Jon M Chu
Starring: Ariana Grande, Cynthia Erivo, Jonathan Bailey, Jeff Goldblum, Michelle Yeoh, Ethan Slater
Rating: 4/5
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Our legal advisor
Rasmi Ragy is a senior counsel at Charles Russell Speechlys, a law firm headquartered in London with offices in Europe, the Middle East and Hong Kong.
Experience: Prosecutor in Egypt with more than 40 years experience across the GCC.
Education: Ain Shams University, Egypt, in 1978.
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
T20 World Cup Qualifier fixtures
Tuesday, October 29
Qualifier one, 2.10pm – Netherlands v UAE
Qualifier two, 7.30pm – Namibia v Oman
Wednesday, October 30
Qualifier three, 2.10pm – Scotland v loser of qualifier one
Qualifier four, 7.30pm – Hong Kong v loser of qualifier two
Thursday, October 31
Fifth-place playoff, 2.10pm – winner of qualifier three v winner of qualifier four
Friday, November 1
Semi-final one, 2.10pm – Ireland v winner of qualifier one
Semi-final two, 7.30pm – PNG v winner of qualifier two
Saturday, November 2
Third-place playoff, 2.10pm
Final, 7.30pm
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The five pillars of Islam
HAJJAN
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
The years Ramadan fell in May
Key changes
Commission caps
For life insurance products with a savings component, Peter Hodgins of Clyde & Co said different caps apply to the saving and protection elements:
• For the saving component, a cap of 4.5 per cent of the annualised premium per year (which may not exceed 90 per cent of the annualised premium over the policy term).
• On the protection component, there is a cap of 10 per cent of the annualised premium per year (which may not exceed 160 per cent of the annualised premium over the policy term).
• Indemnity commission, the amount of commission that can be advanced to a product salesperson, can be 50 per cent of the annualised premium for the first year or 50 per cent of the total commissions on the policy calculated.
• The remaining commission after deduction of the indemnity commission is paid equally over the premium payment term.
• For pure protection products, which only offer a life insurance component, the maximum commission will be 10 per cent of the annualised premium multiplied by the length of the policy in years.
Disclosure
Customers must now be provided with a full illustration of the product they are buying to ensure they understand the potential returns on savings products as well as the effects of any charges. There is also a “free-look” period of 30 days, where insurers must provide a full refund if the buyer wishes to cancel the policy.
“The illustration should provide for at least two scenarios to illustrate the performance of the product,” said Mr Hodgins. “All illustrations are required to be signed by the customer.”
Another illustration must outline surrender charges to ensure they understand the costs of exiting a fixed-term product early.
Illustrations must also be kept updatedand insurers must provide information on the top five investment funds available annually, including at least five years' performance data.
“This may be segregated based on the risk appetite of the customer (in which case, the top five funds for each segment must be provided),” said Mr Hodgins.
Product providers must also disclose the ratio of protection benefit to savings benefits. If a protection benefit ratio is less than 10 per cent "the product must carry a warning stating that it has limited or no protection benefit" Mr Hodgins added.
Wicked
Director: Jon M Chu
Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey
History's medical milestones
1799 - First small pox vaccine administered
1846 - First public demonstration of anaesthesia in surgery
1861 - Louis Pasteur published his germ theory which proved that bacteria caused diseases
1895 - Discovery of x-rays
1923 - Heart valve surgery performed successfully for first time
1928 - Alexander Fleming discovers penicillin
1953 - Structure of DNA discovered
1952 - First organ transplant - a kidney - takes place
1954 - Clinical trials of birth control pill
1979 - MRI, or magnetic resonance imaging, scanned used to diagnose illness and injury.
1998 - The first adult live-donor liver transplant is carried out
EMERGENCY PHONE NUMBERS
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
UAE currency: the story behind the money in your pockets
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
