These easy-to-access unsecured credit facilities, made popular by Klarna and Clearpay, are encouraging impulse buying, overspend and debt, according to consumer champion, Which?

It is calling on Buy Now, Pay Later firms to be fully regulated to ensure shoppers are protected.

It comes as its research revealed “concerning industry practices” such as “pushy marketing strategies”, express checkout services and Buy Now, Pay Later being the default payment method.

Nearly a quarter of the 2,000 polled said they spent more than they intended because they were offered the credit facility.

One in 10 said they incurred late charges as a result of paying this way while 26% said they hadn’t planned on using credit until it popped up at checkout. For nearly one in five (18%), they used the credit option as they were offered a discount.

Which? said these credit firms also advertise heavily on partner websites, particularly via fashion retailers and 41% who were aware of the schemes did not know that missing a payment could lead to debts being passed on to a debt collection agency.

As a result of its findings, Which? is calling for providers of this type of BNPL service to be regulated by the Financial Conduct Authority.

In its submission to the regulator, the consumer champion said that, while supportive of innovation, it believes that the BNPL market must have consumer protections in place in line with other regulated unsecured credit products.

Giving the FCA the powers to regulate the BNPL market would allow it to more effectively monitor how BNPL firms treat consumers, and if necessary, take action to prevent consumers from being harmed.

Jenny Ross, Which? Money editor, said: “While Buy Now, Pay Later services offer speed and convenience at the checkout, our research shows their design makes it far too simple for shoppers to spend more than they were intending.

“This could lead to people building up debts that they may struggle to pay back, which is particularly concerning if they don’t understand the risks of using this type of product.

“Given that many people’s finances are stretched now more than ever, we believe that the FCA needs to regulate this market to ensure consumers are not harmed and that action can be taken if these firms are treating customers unfairly.”

Leading firm Klarna said it does not use “pushy marketing strategies” with customers being provided with its terms and conditions which clearly outline the potential consequences of non-payment.

“If a customer misses a payment, we will proactively contact them to remind them via text, email, in-app notifications and letters. Klarna will only refer unpaid debts to a debt collection agency as a last resort after a period of several months. Klarna is fully engaged with the FCA review of the unsecured credit market,” it added.