Consumer complaint received 2022-09-25
Company: Klarna AB
State: NC
Product: Payday loan, title loan, or personal loan
Sub-product: Installment loan
Issue: Improper use of your report
Sub-issue: Credit inquiries on your report that you don't recognize

Complaint:
Klarna uses misleading and deceptive credit practices to lure people into their buy now pay later services. It is advertised and marketed as no credit history required but they are secretly running soft background checks on their customers without their knowledge. Then they update their privacy agreement to include that you can only seek arbitration and not legal action against them for their illegal practices. I use their service for 11 months without knowing that they were secretly running my credit. I did not make any purchases for two months and they penalized me by decreasing the amount of my buying power from {$800.00} to {$200.00}. Then I made a purchase of a plane ticket paid it off before the second payment and was penalized again. So my buying power went from {$800.00} to {$89.00} with no negative payment history with the company. I often paid off multiple purchase agreements at the same time. So there is no reason for my credit to be pulled or my buying power to decrease. This was my second inquiry into my declining credit worthiness before I was told they are running my credit. I am positive I am not the only person unaware. See part of my chat history regarding this particular matter of the credit pulls below. 

Me : I purchased a XXXX ticket through XXXX on XXXX XXXX. 
Reference XXXX. 
I needed to change flights so it refunded the ticket and repurchased on XXXX XXXX. 
Reference XXXX. 
I paid it off on XXXX XXXX. My available balance still shows as I owe {$110.00}, but my account says I owe {$0.00}. My available purchase power went from {$800.00} to {$200.00} for no good reason and now it's {$89.00}. Please help me understand. 
XXXX XXXX ( Klarna ) : Thank you for explaining! As I can see you paid off all of your active purchases and there is no outstanding balance on your account. Your purchase power is the estimated amount you have left to spend with Klarna. 
It is based on your credit history, your payment history with Klarna, and the total you owe Klarna right now. 
We have implemented a change where your purchase power is calculated based on your credit history and not only payment history with Klarna. As a responsible lender, we want to put people in control of their spending. When we lend people money, we do everything we can to be sure they can pay it back without any stress. To do that, we make periodic changes to our lending policies. 
XXXX XXXX  Me : My actual credit history? I never gave authorization for My credit to be pulled by Klarna. It wasn't required when I signed up My credit history and payment history " with '' Klarna has been good so your explanation makes no sense XXXX XXXX XXXX : That is correct! We do not always perform a credit check on you, nevertheless, as a responsible lender, we want to make sure we're helping our customers make the right financial decisions for their circumstances. When a credit check is performed, we verify your identity using the details you provided and we look at information from your credit report to understand your financial behavior and evaluate your creditworthiness. 
We will not perform a credit check on you when you are signing up to use Klarna and downloading the app. However, we will perform a soft credit check when : deciding to Pay in 4, preferring to Pay in 30 days or applying for Monthly financing. 
According to this information, we will provide you with your estimated available amount for spending. 
XXXX XXXX  Me : That's illegal I never asked for monthly financing. The agreement was 4 payments and credit check " not '' required. There has to be an agreement to pull one 's credit. That was never given.

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation