Could you introduce your project and why it's important?

Lindsey: We all met at the Sandpit, and we were really interested in the idea of digital vulnerability and what that meant through ‘buy now pay later’ [sometimes known as BNPL] products. We were experts from law, AI in computer science information systems, communications and design, and myself as an economic geographer, and we were really interested to find out the process of this product. Our particular interest was in how these were marketed and advertised from the applications, websites and retailers, and how people signed up, or didn’t realise they were signing up for these products. We also looked at how these products were used; perhaps sometimes fraudulently.

There were some new emergent vulnerabilities that we weren’t expecting as a result of the cost of living crisis and people being desperate to use these products for food, for example. But also the fact that some people were gaming the system, borrowing things and returning them, never intending to pay and not realising that it had implications further down the line in terms of their credit score.

There have been comparisons to these services as ‘the new Wonga’. Are they as expensive to use?

Lindsey: No. So the idea is that these are interest free products and that's why people think they're payment services rather than a credit product. But as with many products, hidden in the terms and conditions are additional fees for if you pay late and if you're unable to pay in full as per your contract, for example. These are ways in which the Fintech could manipulate vulnerable users to spend more.

Jo:I think the motivation for us all was this subject’s timeliness. We were all aware of things in the press, both positive and negative. It was the fact that it does echo the Wonga model, which did fail in the end.

And it’s key that people are using it as an alternative to credit cards, perhaps because they can't acquire banking credit, but sometimes just through convenience. I'm very interested in the interaction at the user interface, and the fact that these seamless offers are hidden within what are often trusted vendors’ sites. BNPL products are promoted as offering consumer choice, but the consumer isn't as protected as they would be with a credit card. There’s absolutely no protection. So this project lies at an interesting juncture before regulation catches up with reality.

I am also interested in that it is such a competitive market, that increasingly more of the financial and/or digital services are moving into this space and trying to attract as many customers as possible, effectively making the whole system a vulnerability.

Is there a nexus between regulation and user experience, such as UX web design, where this is presented as just another payment method, like PayPal or your credit card? Is there anything delineated in these aspects that discloses what the end-user is signing up for?

Jo: It depends on the service. It's a crowded market and some of these services are much easier to ‘fall into’ than others. Some BNPL services conduct a light credit check, but for this you're not taken out of a vendor's space. BNPL is just presented as an alternative payment service. But that's my particular interest: the sort of dark patterns that emerge within this seemingly frictionless, as the adverts put it, smooth user experience.

One of our other projects (Revealing Young Learners' Mental Models of Online Sludge, PI Karen Renaud) was focused on dark patterns, and also this idea of ‘sludge’, negative ‘nudge’. Do you see that element in these services?

Jo:Yes, absolutely. I’m interested in these trails of data that then suddenly become somebody's personal credit rating, a function of digital payments and wider digital banking, which isn’t explicitly disclosed. Digital banking is all about sharing tokens and personal information (see Brett Scott, 2022). It's not like money exchange, where there's no trace. So there's lots of hidden potential harms that can’t be readily recognised by users, or anyone beyond those designing the services for that matter.

Lindsey:For example, we know that people may be buying things they wouldn't have necessarily bought had they been using cash. And therefore, because they're using BNPL to pay over several weeks, they may be spending more than they intended to - that's one of the findings by Citizens Advice Bureau.

What is their [the BNPL] business model then?

Lindsey: The FCA recently did a review by Christopher Woolard,* who was looking at unsecured credit and new credit products, and it showed the rise in the use of BNPL and why [it] needed to be regulated to protect consumers. So regulation is going to be introduced, but the key BNPL players in the UK have recently started to report to credit reference agencies. This means that they'll leave a credit scoring mark on your records so that if you fail to repay, for example, there will be a formal credit check in the future as well.

Jo: Because of the data trails these services can target people who might not even recognise themselves as potentially being financially vulnerable, and then offer them that extra service. There's also negotiation on an individual level because the sector is so competitive. One BNPL service was negotiating with people that were about to go into debt, giving them an extended time period to make the payment.

Using these services is not exclusive to people with lower incomes. With that said, in the current UK economic climate, people may be more likely to use the BNPL services. Would you say that these services work in alignment with or exacerbate the vulnerability of people with lower incomes?

Lindsey: That's a good question. They're offering a lifeline to many people who would not necessarily be able to get a credit card or mainstream credit. Some people are only using this for basic needs, for school uniform for example. There'll be a huge rise in that at this time of year because people can't afford these basic items and so BNPL companies are providing a valuable service to people, which shouldn't be cut off.

On the other hand, there need to be checks to make sure that people understand what the products are, the repayment terms and conditions, and have knowledge of the fact that it is credit and can have implications if they don't repay. So it's making sure that the products are affordable for people; and that responsibility lies with the lenders. That's why the sector needs to be regulated..

Jo: I would also argue a lot of this is about essentials, but also a lot is also about non-essentials. The advertising plays to people's aspirations and is super targeted towards specific demographic groups. Going back to what Lindsey said about peak spending periods, another one of those is Christmas, with parents spending a bit more thinking they've got longer to pay it back. So it's not just people on the lower income levels.

How exactly do you think fast fashion, influencer culture and [those types of] marketing tactics have impacted people's attitudes to their digital or financial footprint with these types of services?

Jo: Lockdown certainly brought about a surge in online shopping and spending. If we go back to the financial services, they have used lockdown in my opinion as an excuse to close high street branches and cash machines. We are careering towards a digital currency. Online consumption arguably encourages spending on what people don’t need with money they don’t have. And then we must consider the context of mental health, where there is an intersection of vulnerabilities; people may think that spending will improve their mood and well-being.

There's a very interesting demographic that is interested in almost the opposite of frictionless spending – friction-al spending, i.e. using cash and having a certain amount for a certain period. What do you think about these tactics as potential interventions?

Jo: Well, they push the responsibility onto the individual when there needs to be some sort of regulation. But I'm really interested in the dematerialisation of money, especially with the ease of contactless payments for example. I don't think that's necessarily going to be an output focus of this project, but it's something that I was looking at. Dematerialisation of money worryingly creates these highly detailed longitudinal data traces, which can lead to you becoming a target of advertising and new products, creating the vulnerability that you're targeted by either another service.

Finding that individual balance is interesting. For instance, people spend a lot of money on cars, but it loses half its value once you drive it for the first time. What do you think about these sort of common tendencies?

Lindsey: I think it goes back to the idea of subscription economy, where you may not pay for anything in full these days. You pay for it monthly or weekly, whether it's your TV subscription or clothes or your credit card. But it makes people think differently about that purchase because they consider it affordable.

How much was in the academic sphere as you were approaching the project?

Lindsey: Digital vulnerabilities in this Fintech space is an emerging area, and that's been exciting to work and develop. There are people working from different disciplines all looking at digital vulnerability, consumer vulnerability, financial vulnerability or criminal justice and vulnerability and our work is about bringing those things together and deciphering what that meant for Fintech. However, no one was really looking at BNPL. That's why it's been quite challenging to bring it all together because we're a big group of 6, working in different disciplines, trying to tie them all together whilst focusing on the one product. It has been really interesting, which has made it more insightful and exciting to work on.

Jo: It was a super multidisciplinary group, which I think for me made it difficult to know where the project was going early on but ultimately, this gave us a much richer multidimensional picture..

Any final words?

Lindsey:I think there's always a tendency to focus on the individual responsibility and with these issues there needs to be greater emphasis on the role of the providers, and future-proofing regulation. There needs to be some protection for consumers, their finances and their data so that they understand what these products are, how they work. There is an emergent, murky world of influencing and promoting products where there isn’t an understanding of the fine print, such as in the advertising of diet products, for example.

On the other hand, it’s about educating people to understand how their data is being used, and how they can be nudged to make certain decisions that render them vulnerable. But primarily, the onus needs to be on the companies to make sure their products and services are very clear, that people understand what they're signing up for, and the implications of that.