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Klarna’s buy now pay later service specifically targets poor consumers struggling to make ends meet and overburdens them with undisclosed bank fees and interest, a new class action lawsuit alleges.
The nationwide class action lawsuit was filed in Connecticut on June 2 by lead Plaintiff Najah Edmundson, who alleges that Klarna falsely advertises itself as a service that allows users to pay for purchases at a later date, with no interest, no fees, and no hassle.
The company allows consumers at the checkout to divide a payment into four parts, where one is required at checkout and the remaining three are deducted by Klarna from the account holder over the following weeks. The company’s huge drawcard is its advertised lack of fees.
“These representations are false. In fact, there are huge, undisclosed fees and interest associated with using the service,” Edmundson says in the claim.
Edmundson made two purchases in February using Klarna unaware that Klarna’s service had a significant “catch” and that significant “interest” could result, the claim states.
On March 6, Klarna made a $15.83 deduction from Edmundson’s account as a partial repayment for one purchase. The deduction caused a $35 overdraft fee at her bank. Then the following day, Klarna made another deduction of $9.31 for the other purchase, which also caused a $35 overdraft fee.
According to the claim, Edmundson, like numerous other consumers, was deceived into using Klarna’s buy now, pay later service because of the company’s misrepresentations and omissions regarding the true operation and risks of the service.
“These risks include the real and repeated risk of multiple insufficient funds fees (‘NSF fees’) or overdraft fees imposed by users’ banks as a result of automated Klarna transfers from consumers’ checking accounts,” the claim states.
It adds that the “massive risk” is known to Klarna, but is omitted from all of its marketing. Instead, according to the Klarna website, the service is completely free, with no interest or hidden fees.
Klarna’s marketing and public communications stress that it is a service that allows users to avoid overdraft fees, interest and other predatory charges, the claim states, adding that Klarna CEO Sebastian Siemiatkowski recently told CNBC that: “We are, with this product, challenging a massive industry that has overcharged consumers with overdraft fees, with interest bearing terms of use.”
However, Edmundson says in the class action lawsuit that Klarna targets the same consumers as banks target with fees: those living paycheck to paycheck. “As a result, Klarna knew or should have known that such users were at extreme risk of overdraft fees when using the Klarna service.”
Edmundson wants to represent anyone who used Klarna and got an NSF or OD fee as a result. She is suing for fraud and violations of state advertising laws, and seeks damages, restitution, an injunction, and a jury trial.
Overdraft and insufficient fund fees are often the cause of class action lawsuits. This month, WesBanco was hit with a class action lawsuit that alleges the bank breaches its contracts with consumers by charging overdraft fees on accounts that are not overdrawn and charging numerous insufficient fund fees on the same item.
Have you ever used Klarna and been charged an overdraft or insufficient fund fee? Let us know in the comments section!
Edmundson is represented by Richard E. Hayber of Hayber McKenna & Dinsmore and Taras Kick of The Kick Law Firm, APC.
The Klarna Hidden Fees Class Action Lawsuit is Edmundson vs. Klarna, Inc., Case No. 3:21-cv-00758-KAD, in the U.S. District Court for the District of Connecticut.
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80 thoughts onKlarna’s ‘Free’ Buy Now Pay Later Service Burdens Cash-Strapped Consumers With Fees, Class Action Claims
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Add me to the class action suit too, please.
How can I join the class action lawsuit against Klarna? They have been scamming me as well.
Refused to adjust my account after returning an item; Monthly payment remained the same. Typically, and with most credit card issuers, the lower your balance, the lower your monthly payment. Not with Klarna, however.
Add me please
Add me! Klarna just overdrafted my account, but a couple of days prior it sent out a notice saying “make sure there are sufficient funds to cover payment”, there weren’t. On its site it says if the charge can’t go through that it will try again and that you may get a late fee but if that’s true then it shouldn’t be over drafting accounts!
Klarna sent my payments into collections, the collection was paid off and they never applied the payments to my actual Klarna account through TRUE ACCORD, and now I have overdraft fees of 540, and they charged me over 667.00 for payments after TRUE ACCORD sent me a detailed account statement explaining that I had paid them all off…How do we get in this class action?!
Klarna tied and fraudulently as well. I returned items to Sephora per Klarna instructions and that are still trying to steal money. On top of that, with Klarna security breach in May 2021, our private information was shared with others.
Luckily with the security breach my bank blocked them for the suspected fraud and they couldn’t steal my money or cause any OD fees. Now I have to file complaints against both Klarna and Sephora for financial theft/fraud.