Billboards urge consumers to ditch Buy Now Pay Later products

• Financial coaching app Claro launches a campaign encouraging the public to reduce their Buy Now Pay Later reliance in exchange for a free financial coaching session
• Using the app, people can speak to a financial coach, create a financial plan, set goals and grow their money

The UK’s first financial coaching app, Claro, is encouraging the British public to reduce their reliance on Buy Now Pay Later (BNPL) schemes by launching a series of eye-catching billboards at key landmarks in the capital.

Claro is on a mission to help everyone develop a smart money mindset and a healthy relationship with money, so that they can achieve their goals. It has launched – “Bye Now Pay Later” – a series of digital billboards which feature shocking statistics on the financial habits of society, at prominent sites in London, including Oxford Street, London Bridge, Canary Wharf and Westminster.

The digital financial coaching app’s campaign encourages the public to claim one of 1,000 free one-to-one personal finance coaching calls, where they can get help creating a financial plan and building sustainable financial habits, in an effort to drive lasting change in the way society manages money.

The recent Woolard Review and subsequent Financial Conduct Authority (FCA) plans for regulation of BNPL schemes means changes will be made to the sector, however their rapid rise over the pandemic means that reforms will be too late for many.

The campaign features a series of hard-hitting statistics from Claro’s own research, published in its Mental Health Project report, created in partnership with Mental Health UK and The Money Charity, which found:

• 41% have been living beyond their means at some point over the last 12 months,
• 20% of households couldn’t last a month if they lost their main source of income, without needing to borrow money,
• 29% of 18 – 30 year olds don’t use a budget to manage their income and expenditure.

Rob Brockington, CEO at Claro comments: “Unconsidered spending and an overreliance on unsecured financial products, such as Buy Now Pay Later schemes, can ruin people’s personal finances for years. We want to reduce this reliance, and remind consumers that they have a choice in how they save, spend and invest their money. Our ‘Bye Now Pay Later’ campaign is aiming to raise awareness of the benefits of better money management for everyone, regardless of their income, bank balance and social standing.”

Claro’s “Bye Now Pay Later” digital billboards also hit the road, with an advertising van visiting the country’s most famous high street, high street Oxford Street, the ASOS head office, Boohoo London office, Klarna and ClearPay head offices.

Claro is also inviting BNPL providers and retailers to a meeting to explore ways of promoting considered spending among the public, and educating people on unsecured credit products. The financial coaching app believes that there is a place for BNPL products in the market, however it should be used occasionally, rather than relied on. Issues can begin if a regular habit of using these products is made. Better awareness and education are needed to prevent an overreliance on these facilities.

Dr Mark Fenton-O’Creevy, Professor of Organisational Behaviour at Open University Business School (OUBS), said: “Buy Now Pay Later products, especially when accompanied by an “interest-free” headline offer, can be particularly appealing to cash-strapped consumers.

“Some BNPL offers are in good faith, with the win-win aim of allowing customers to spread payments affordably whilst increasing sales. However, others amount to worryingly ethically questionable practices.

“Firstly, some providers are knowingly encouraging impulsive buying behaviour, which our research shows significantly increases the chances of experiencing financial distress. The Woolard report highlights a correlation between those with pre-existing mental health concerns and the up-take of unsecured financial products such as BNPL. A combination of an increased chance of financial distress with pre-exposure to mental health challenges is surely an area that leads to significant concern for individuals and society.

“Secondly, it is far too common for BNPL providers to impose high interest rates and excessive penalties (above traditional regulated financial credit) when consumers fail to meet payment deadlines. This relies on the well documented psychological tendency many consumers have to underestimate the difficulty of remembering or meeting payment schedules. As the Woolard report also highlights, BNPL are commonly targeting a younger audience and this may be seen to some as preying on the lack of experience or knowledge of financial products and the impact these can have on not only credit scores but mental wellbeing, if not carefully managed.

“It seems likely that in many cases, BNPL firms are profiting from offering low or interest-free credit headline offers carefully targeted at specific consumers not just by generating increased sales for retailers but also through penalty interest rates and additional charges. If consumers predominantly used the headline advertised interest free options the BNPL would most likely not generate comparable profits and this demonstrates the commercial reliance on exploiting known psychological traits of targeted sections of our society.”

Rob Brockington, continued: “There are parallels between the safe use of credit cards and BNPL products, however there isn’t currently the same level of awareness around the considered usage of BNPL products like there is with 0% interest credit cards and their strict no repayment fee terms. We want consumers to approach BNPL schemes with the same caution they would when taking out a credit card, but building this awareness takes time. We would like to see the FCA review and regulate the industry in the same way Sweden has done with the introduction of the e-commerce payments bill.”

Rachel Harte, Head of Financial Coaching at Claro, continued: “The rapid rise of BNPL providers and schemes must be met with an equally speedy increase in awareness of the dangers of its misuse. We want to instil better habits in people when using these schemes – there is nothing wrong in using BNPL if the debt is paid-off within the 30 days or soon after. However, the truth of the matter is for many, using BNPL schemes becomes a habit and the problem is exacerbated as more retailers provide the service at the point of purchase.”

The free to download app, which launched on 16 August, helps users to learn, plan, save and invest their money, and is already in high demand with over 20,000 users signed up to its waiting list. Claro is offering limited users a 2% cash bonus on their first £3,000, aimed to help people build an emergency fund.

Rob Brockington, continued: “Most people are overlooked when it comes to financial support as it is typically aimed at those with significant savings or investment portfolios. Claro is designed for people at all stages of their financial journey. Our new 2% cash bonus will kickstart users’ efforts in saving for their financial goals.”

The app has been developed to directly support users to build an achievable yet effective financial plan, regardless of their income or financial stage.

Those wanting to remove their reliance on buy now pay later facilities for non-essential spending can visit www.Claromoney.co.uk/byenow and download the iOS app to claim their free one-to-one financial coaching call. Registrations for the coaching call are valid until 30 September.

Through comprehensive in-app features, including one-to-one financial coaching sessions, spending analysis, and smart goal setting, Claro combines technology with a human approach to provide users education, support, and tools to allow them to achieve their personal financial objectives.

The app also gives users access to saving and investing products that suit their needs, based on their timeline, risk level and values.

Claro’s “Bye Now Pay Later” digital billboard campaign appeared at more than 20 sites across London, including:

• Houses of Parliament
• Bank of England
• Oxford Street
• ASOS offices
• Boohoo London offices
• Klarna
• ClearPay
• Oxford Circus Underground station
• Canada Square Underground station
• Canary Wharf

For more information, visit www.claromoney.co.uk