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Clearpay, Openpay and Laybuy customers due refunds after wrongly being charged late payment fees - here's what's happening

Shoppers using certain buy now, pay later (BNPL) services may be due refunds after wrongly being charged late payment fees. Providers Clearpay, Openpay and Laybuy have all agreed to repay borrowers following involvement from the financial regulator.

The issue affects borrowers who were charged late repayment fees despite cancelling their online orders in full - see below for more on this. 

It comes amid a host of changes put forward by the Financial Conduct Authority (FCA) to make contracts of the three BNPL providers, plus Klarna (which doesn’t charge late payment fees), fairer. The shake-up includes making shoppers’ rights clearer when they cancel purchases funded by a BNPL loan. 

BNPL can be a cheap and quick way of accessing credit to pay for purchases both online and in store but if something goes wrong you face late fees and even marks on your credit file. See our BNPL guide for more info on how it works.  

Affected borrowers should be contacted but get in touch with your provider if you've been wrongly charged

Detail on refunds is scant at present but we do know that the issue impacts shoppers who cancelled a transaction paid for using BNPL and who were then hit by late repayment fees. So if that’s you, it is worth getting in touch with your BNPL provider to check if you’re owed cash.  

This does not, however, impact those who returned partial orders placed via BNPL who were then charged a late payment fee. 

It’s not clear though when affected borrowers will be refunded, how much they’ll get back on average, or over what timeframe this issue relates to. We’ve asked the lenders and the FCA and we’ll update this story when we know more.  

For now, Clearpay would only tell us that a small number of customers were incorrectly charged, adding that they will be contacted and refunded.

Late payment fees of up to £36 can be charged

Below is a breakdown of the late repayment fees these firms charge:

  • Clearpay charges a late fee of £6. This fee can only be charged once for orders under £24. But for orders over £24 you can continually be charged late fees, capped at 25% of the order's cost or £36 (whichever is less).
  • Laybuy charges a late fee of £6. This fee can be charged twice per missed instalment (so £12 per instalment). If you were late in paying three instalments, the maximum amount in late fees you could be charged is £36.
  • Openpay charges a late fee of £7.50. This is taken two days after your payment is due. You will then be charged £7.50 again if you still have not paid your instalment after 10 days. We’ve asked Openpay what happens after 10 days.

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