How Do Returns Work With Buy Now, Pay Later?

Quick Answer

When you return a BNPL purchase, any refund will go to the BNPL lender, not you. You will get your money refunded after the lender receives and processes the refund.

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Making a purchase using a buy now, pay later (BNPL) plan can be easy and convenient—but returning purchases can be a different story.

You might be able to return merchandise for a refund or store credit, but you could still be on the hook for payments until a refund is issued and applied to your account—which could take up to 50 business days.

Despite the difficulties, BNPL returns are fairly common. The Consumer Financial Protection Bureau (CFPB) reported that more than 10% of BNPL purchases were returned in 2020 and 2021. Here's what to know about returning a BNPL purchase.

How Do Buy Now, Pay Later Returns Work?

Because buy now, pay later loans are primarily made for online transactions, returns often involve shipping and tracking. You will need to first check the merchant's return policy, make sure the item is returnable and, assuming it is, follow exactly the instructions for return. You will also need to check the BNPL lender's policies and follow those as well.

BNPL returns don't all work the same way, but they have a few things in common:

  • The merchant's return policy determines whether an item is returnable and how the return will work.
  • The refund is issued to the BNPL provider, not the buyer.
  • You may still need to continue payments on the item you have returned until the return has been issued and applied to your account.
  • You bear the responsibility for keeping track of the various items you need to document your return. These could include a copy of the return policy, return authorization number, merchandise tracking, payment receipts and any correspondence between you and the lender and you and the merchant.

Returns typically require you to ship the merchandise back to the seller, wait for the return to be accepted, wait for a refund to be issued to the BNPL lender and then wait to have it applied to your account. If the return requires shipping, it would be wise to retain proof of delivery and communication between the store and the BNPL platform.

When it comes to disputing a purchase, lenders have different policies about whether you must continue to pay and for how long. Some consumers, after trying on their own, have found success resolving disputes or getting refunds by turning to social media.

How to Return a BNPL Purchase in 6 Steps

  1. If the merchant has a brick-and-mortar location, you may be able to simplify the process by returning the item in person.
  2. Have the order number, tracking information and a copy of the store's return policy handy. You may also need a merchandise return authorization from the store, which you should follow exactly.
  3. If you need to ship the item, follow instructions to the letter and retain tracking numbers.
  4. Continue to make payments if your BNPL agreement requires you to do so.
  5. Once you receive word that your return has been accepted, check to see when a refund will be issued if possible. The refund will go to the BNPL lender, not to you.
  6. Check your contract or BNPL website for how long it could take for the refund to be processed and returned to your account. If the maximum time noted by your lender has passed and you haven't received the refund, contact the lender.

If you have trouble getting a refund for your return, consider reporting it to the CFPB or Federal Trade Commission (FTC). One difficulty with BNPL returns is that they depend on several entities working together, and there can be finger-pointing and blaming other parties when there are delays.

While truth in lending laws require credit card issuers to allow chargebacks when there are disputes, there are no such protections for consumers who use BNPL loans to finance purchases.

Do You Have to Pay Off a BNPL Loan Before You Can Return an Item?

You do not typically have to pay off a BNPL loan before you can return an item. However, you may find yourself paying for an item you have already returned.

The fact that a return has been accepted by the merchant does not mean you can stop making payments to the lender—it means the merchant owes the BNPL lender a refund, which the lender can then pass on to you. This could take days, or it could take weeks or months, particularly if there's a dispute.

If you do not continue to pay the lender, even if merchandise has been returned and accepted, you could trigger late fees and penalties. And if you return the item in person and the merchant refunds your purchase via cash or store credit, you will still need to make BNPL payments for the full purchase price as agreed.

What Protections Do I Have With BNPL?

With buy now, pay later, you do not have protections similar to those afforded consumers who use credit cards, according to the FTC. It has, however, published reminders for companies offering compliance tips and advising against "deceptive or unfair tactics." Additionally, the CFPB has indicated it will work toward making sure consumers get similar protections with BNPL loans to the ones they have with credit cards.

It's crucially important to familiarize yourself with the BNPL terms and return policies before you buy. The Truth in Lending Act has not been generally applied to buy now, pay later loans because it applies to loans with interest. Most BNPLs do not charge interest if you pay on time.

Consumers are entitled to a "timely" refund when the merchant agrees that one is due. According to the FTC: "If the customer doesn't get a timely refund, any company that made misleading claims about what would happen in those circumstances—as well as anyone involved in delaying refunds—could be liable under the FTC Act. Even if the person ultimately gets their money back, the time they spent in the process counts as injury under the FTC Act, particularly if they had to contact a company (or several companies) multiple times or wait weeks for their refund to arrive."

The Bottom Line

BNPL loans can be quick, easy point-of-sale loans that allow consumers to pay for items relatively quickly and without interest. However, it's important to understand that these loans are less regulated than many traditional types of credit, and returns may be time-consuming or difficult.

BNPL loans can make it easy to overextend yourself, and owing the money for a returned item can be frustrating. It's smart to be aware of return policies, and to know what to expect in the event you want to return your item(s), before you make a buy now, pay later purchase.