Over the last few years, the presence of Buy Now Pay Later (BNPL) schemes has increased. According to ComparetheMarket, in 2019, one in five UK shoppers used a BNPL scheme to purchase items; this equates to around ten million people. Of these ten million users, it is unsurprising that BNPL schemes are most popular with young people aged between 25 and 34. But popularity does not automatically guarantee that a scheme is ethical. Can BNPL schemes be considered ethical?
In short, no. Buy Now Pay Later schemes cannot be described as an ethical alternative for purchasing items for a multitude of reasons - least of all because they are a debt trap for young and inexperienced shoppers.
BNPL schemes are an unregulated industry which leaves users more at risk than other forms of short-term loans. Buy Now Pay Later schemes do not carry out the same background checks as other loan providers, meaning they do not have to make clear what the consequences are for those who cannot afford to repay their debt. Organisations such as Money Saving Expert report that they fear BNPL schemes enable people to end up in circumstances where they have debt they are simply unable to repay ('unaffordable debt'). BNPL schemes such as Clearpay and Laybuy charge late fees so it is easy to see how unaffordable debt can quickly stack up and trap users in a never-ending cycling of owing money. Late payments can also affect your credit score later in life and make it harder to borrow in the future.
Whilst it can be argued that these debt problems are the fault of the user rather than the scheme itself, the responsibility to ensure their customer can afford repayment falls at the feet of BNPL schemes. As stated previously, credit checks are not made and therefore money is lent to customers who may have no way of repaying what they owe. Buy Now Pay Later schemes do not protect their customers. Moreover, they knowingly put their customers at risk of financial difficulty whilst not being upfront about all aspects of repayments and late-fines. Customers should be able to trust the company they are using and unfortunately, with BNPL schemes, they cannot.
However, financial implications are not the only reason why Buy Now Pay Later schemes can be deemed unethical. BNPL schemes pose a huge ethical dilemma in terms of the environment. Buy Now Pay Later schemes encourage us to purchase in excess with the intention to pay at a later date. When we are encouraged to buy in excess, we gravitate towards cheap or affordable items and fast fashion. In fact, 31.41% of BNPL users use the schemes to purchase casual wear. Whilst this does not sound like a huge amount, it is just under a third of users and is in the top two purchases made by BNPL users. Out of the top ten fashion brands purchased through BNPL schemes, four of those are renowned for being huge contributors to fast fashion and inadequate working conditions for employees. The top three fashion brands purchased through BNPL schemes are Nasty Gal, Boohoo and Pretty Little Thing, with ASOS coming in at number 10. It appears that Buy Now Pay Later schemes are heavily linked with fast fashion and thus do extreme damage to our environment.
In a time when we are trying to be more environmentally conscious and protect our planet, is it really ethical for these BNPL schemes to encourage users to contribute to fast fashion? Is this just another example of a company trying to profit at whatever cost, even if that cost is our planet? Is this yet another example of a company that needs shaming rather than the customer? If we are led to believe we can afford more than we actually can and purchase fast fashion in excess, are we not being misled into contributing to environmental damage?
The third and final reason Buy Now Pay Later schemes, in my opinion, cannot be deemed ethical is the issue of gender and gender stereotyping. For as long as we can remember, there has been a massive gender issue involved in the idea of shopping for pleasure. Leisure shopping is deemed to be a woman’s hobby, whilst sporting activities and DIY are perceived to be a man’s hobbies. The way BNPL schemes are advertised, in particular on social media, further plays into this stereotype.
The social media platforms of BNPL schemes such as Klarna, Clearpay, Laybuy and many more all seem to tailor their platforms to the perceived needs of women. Their Instagram pages are full of enticing pictures of beauty products, clothing, jewellery and home decor. All of these items are typically associated with the purchasing preferences of women and viewed as distinctly feminine. In contrast, there are very few photos of ‘masculine items’ such as cars or sporting equipment. It appears that Buy Now Pay Later schemes believe women to be the bigger leisure shoppers and therefore tailor their social media platforms to include more items they deem to be feminine. In fact, one BNPL scheme – Klarna’s - whole colour scheme revolves around pink hues – a colour that has always been viewed as traditionally feminine. This suggests, rather unsubtly, that this is a company aimed at women, which attempts to draw women in through its pink, feminine appearance. In a society that is striving for gender equality, it is unethical for companies to continue to perpetuate age-old stereotypes and to tailor their advertisements and social media to one sex over another because of their perceived buying intention.
To conclude, whilst Buy Now Pay Later schemes may offer those in need a way to purchase items they require, in a way they can afford, BNPL schemes cannot be deemed ethical. Any company that enables people to rack up unaffordable debt, whilst contributing to the destruction of the environment and perpetuating harmful gender stereotypes, cannot and should not be deemed an ethical solution to a financial problem.
By Phoebe Hurst
Display image courtesy of Karolina Grabowska via Pexels
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