eBay BNPL promo under fire as Which? questions BNPL incentives

A consumer charity has questioned whether an eBay promotion encouraging use of a Buy Now, Pay Later (BNPL) service could spur greater adoption of unregulated credit. The Which? UK charity said an eBay newsletter offering discounts to shoppers who paid with Klarna’s Pay in 3 BNPL service risked encouraging the use of credit that is not regulated by the Financial Conduct Authority, and that important warnings about the risks were not clearly visible on all devices.

Which? said the August newsletter invited customers to save when paying with Klarna, with the subject line: “Save extra when you pay with Klarna.” It outlined tiered discounts: shoppers spending between £70 and £149.99 could receive £5 off, while those spending £550 or more could take £50 off. The group noted that the relevant disclaimer explaining the risks of taking out BNPL credit did not appear consistently across devices, potentially leaving some readers unaware of the downsides of delayed or split payments. BNPL schemes allow consumers to split purchases into installments, sometimes interest-free, a model that can be appealing for bigger-ticket items but also carries the danger of late fees, rising debt, and negative impacts on credit records when payments are missed.

BNPL products are not currently regulated by the Financial Conduct Authority, which means consumers may not receive the same protections as traditional credit products, such as coverage under Section 75 or access to the Financial Ombudsman Service. Which? said the lack of explicit warnings could leave some shoppers unaware of potential consequences, including late fees that can reach up to about £10, adverse entries on credit files, and possible referrals to debt collectors.

“It’s concerning that big retailers are incentivising customers to use BNPL products,” said Reena Sewraz, retail editor at Which?. “While BNPL can help people spread the cost of purchases, missed repayments can lead to late fees, a damaged credit record, or even debt collection. Any promotions that encourage BNPL use should clearly outline the risks, and shoppers should weigh whether BNPL is right for them rather than borrowing beyond their means.”

What did eBay say? In response to the concerns, eBay told Which? that the required credit disclosure had been clipped from the bottom of the email on some devices due to rendering issues. The company said the problem had since been corrected, with the disclaimer moved higher up in its newsletters to ensure visibility. The disclosure text is mandated by Klarna and reads: “Klarna’s Pay in 3 is an unregulated credit agreement. Borrowing more than you can afford or paying late may negatively impact your financial status and ability to obtain credit. 18+. UK residents only. Subject to status. T&Cs and late fees apply.”

Klarna, for its part, said it provides merchants with clear guidelines to ensure the required disclosures are present and noted that Pay in 3 is an unregulated credit product. The payments provider added that it offers buyer protection so customers won’t pay for items that aren’t delivered or are faulty, and that it has introduced an internal complaints adjudicator as an interim step until its customers can access the Financial Ombudsman Service.

The episode highlights ongoing tensions around BNPL advertising. In recent years, consumer groups and regulators have heightened scrutiny of BNPL promotions, arguing that the ease of use can encourage shoppers to accumulate debt without fully weighing the costs. The Advertising Standards Authority has stressed that BNPL ads should be responsible, given that these payment options involve borrowing money, and should avoid encouraging excessive spending through credit. The ASA has previously reminded retailers not to mislead consumers about the protections attached to BNPL products or the true cost of these loans.

For eBay, the incident underscores the delicate balance online marketplaces must strike between promotional incentives and consumer protection in an evolving payments landscape. The company did not indicate any changes to its BNPL partnerships beyond correcting the disclosure placement in the August send, but observers say the episode could prompt broader attention to how BNPL offers and warnings are presented across platforms. As BNPL usage grows in e-commerce, regulators and consumer advocates are likely to continue pressing for clearer, consistent disclosures and stronger safeguards for borrowers, especially for retail promotions that tie discounts to the use of a specific financing option.

The dialogue between Which?, eBay, and Klarna illustrates the friction between marketing tactics intended to boost sales and the need to ensure consumers understand the long-term implications of using BNPL schemes. While BNPL can facilitate larger purchases for some shoppers, it remains crucial that promotional materials accurately convey the costs, risks, and eligibility requirements so buyers can make informed decisions. The industry’s next steps may involve more uniform disclosure standards and potential regulatory evolution to align BNPL with existing consumer credit protections.