How Do Returns Work With Buy Now, Pay Later?

How Do Buy Now, Pay Later Returns Work?

Returning a BNPL purchase starts with the store, similar to other returns. All BNPL returns are subject to the store's return policy, including deadlines, restocking fees and eligibility for refunds or store credit.

Once the retailer accepts your return, they notify the BNPL provider. After the BNPL lender receives confirmation from the store, they'll process your refund. How you're refunded depends on several factors, including the refund amount, your remaining balance and the payment method you used. Refunds are usually handled in one of the following ways:

• Applied to your BNPL balance. This is common if you still have an outstanding balance. The refund may either reduce the total number of remaining payments or lower your final payment.
• Refunded to your bank or credit card. If you've already paid off all or part of the returned purchase, the lender may issue a refund to the payment method you used for your installment payments.
• Issued as a check. In some situations, you may receive a refund by mail. This can happen if your payment method is closed or inactive, the purchase was made more than 180 days ago or there's a processing issue with the refund.

If the store issues a store credit instead of a refund, you won't receive a credit to your BNPL balance. In that case, you're still responsible for paying the BNPL loan according to the original terms.

Learn more: Pros and Cons of Buy Now, Pay Later

How to Return a BNPL Purchase in 5 Steps

Returning a BNPL purchase usually involves a few extra steps compared to other payment methods. Following these steps can help reduce delays:

1. Return the purchase to the retailer. Complete the return either in person or by shipping the item back based on the store's return policy. If shipping is required, be sure to follow instructions carefully and keep all tracking numbers and receipts.
2. Check the store's return policy. The store determines the type of refund you'll receive. Some retailers issue refunds back to the original payment method, while others only offer store credit. Store credit won't be applied to your BNPL balance.
3. Notify your BNPL lender through the app. Some lenders allow you to indicate a return in progress, which can temporarily pause payments for mailed returns. Otherwise, if the option to pause payments isn't available, continue making your scheduled payments until the refund is applied.
4. Monitor your email and BNPL app for updates. Once your return is accepted, check for confirmation from the store and your BNPL lender that the refund is being processed. In most cases, refunds are applied to your BNPL balance if you still have one.
5. Review refund timelines. Check your contract or the lender's website for information on refund processing times. If the maximum time has passed and you haven't received your refund, contact the BNPL lender directly.

Tip: Because BNPL returns involve coordination between retailers and lenders, delays can happen. If you have trouble getting a refund for your return, consider reporting it to the CFPB or Federal Trade Commission (FTC).

How Long Do BNPL Returns Take?

The time it takes to process a BNPL return varies based on how the item is returned and how quickly the retailer confirms the return. In-store returns are often processed faster, while mail-in returns can take longer due to shipping time and inspections.

Once the BNPL provider receives confirmation from the store, normal refund processing typically takes between three and 14 days. The timeline can be longer if the retailer is slow to confirm the return or you initiate a dispute.

Learn more: Steps for Using BNPL In-Store

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

In most cases, you don't have to pay off a BNPL loan before you can return an item. However, you may end up paying for an item you've already returned if your refund is delayed.

When a store accepts a return, the store technically owes the refund to the BNPL provider. Once the BNPL lender receives the refund from the store, they'll credit or refund you. This process can take several days, or longer if there's a dispute.

If you stop making payments before the return is processed, you could trigger late fees or penalties. Some BNPL providers allow you to temporarily pause payments while you have a return in progress, but you typically have to notify them through the app. If you return the item in person and the store refunds you with cash or store credit, you're still responsible for paying the BNPL loan as agreed.

Learn more: Can I Pay Off My BNPL With a Credit Card?

What Protections Do I Have With BNPL?

Similar to credit cards, BNPL loans now have certain protections for consumers under the Truth in Lending Act. These protections include:

• The right to dispute charges: BNPL lenders must investigate disputes and may be required to pause payments during the investigation.
• The right to receive refunds: If a return is accepted, lenders are required to credit refunds to your account.
• The right to a billing statement: BNPL lenders are required to send clear billing statements including your balance, payments and due dates.

The Bottom Line

BNPL can make large purchases more manageable, but returns require extra attention. Because refunds are made from the store to the BNPL lender first, refund processing can take longer than with other payment methods.

Reviewing your lender's return process is essential, since policies vary by lender. Unless your lender says otherwise, be sure to continue making payments until your return is finalized. This way you avoid late fees, keep your account out of collections and protect your credit standing.