Consumer complaint received 2022-05-21
Company: Klarna AB
State: WA
Product: Payday loan, title loan, or personal loan
Sub-product: Installment loan
Issue: Problem when making payments

Complaint:
XX/XX/XXXX I filed a claim against Klarna here at the CFPB for not responding to my NUMEROUS efforts and requests to have my {$75.00} payments ( sent from my bank directly to them VIA ACH ) to be applied to the next payment due. My payments are {$68.00} due on the XXXX. My payments have been sent, and are processed at least 5 days before they are due. But what they have been doing, NOT AT MY REQUEST, is applying the entire payment to the principal. They send an email " thank you for your payment ''. Then they follow up with me emails that my payment is due, then that it " failed '', then it was missed - and they increase my interest rate I HAVE BEEN PAYING MORE THE THE MINIMUM DUE AND HAVE BEEN PAYING EARLY. I AM MAKING A GOOD FAITH EFFORT TO PAY MY ACCOUNT OFF EARLY AND WAS HOPING TO BUILD GOO CREDIT. 

They responded on XX/XX/XXXX refusing my request to allocate my funds to the next payment due automatically. 


" XXXX XXXX, Thank you for reaching out in regards to the payments associated with order XXXX with XXXX XXXX. Our review of your concern found that autopay was not previously enabled on your account. '' YES, IT WAS SET FOR AUTOPAY, AS I STATED IN THE OPENING OF MY FIRST COMPLAINT TO YOU AS FOLLOWS : " I purchased a bed from XXXX using Klarna on a 12 month plan. I set up autopay and correctly added my debit card. On XX/XX/XXXX, when I had over {$1800.00} in the account, their system failed in withdrawing the funds. The error was on their end, not mine. '' THE INITIAL PAYMENT ON XX/XX/XXXX WENT THROUGH, DEMONSTRATING I ENTERED THE ACCOUNT INFORMATION CORRECTLY. I SENT PROOF IN THE LAST COMPLAINT THAT I HAD OVER {$1800.00} FUNDS AVAILABLE ON XX/XX/XXXX. THE PROBLEM WAS CLEARLY A PROCESSING ERROR BY KLARNA. 

" As a one-time courtesy, we were able to have the payments reallocated to reflect XXXX and XXXX of XXXX as paid. You will no longer see any failed payments on your account. In addition, we have updated the account status and can confirm no information has been reported to the credit bureaus at this time. '' IT IS NOT A COURTESY TO APPLY MY PAYMENTS THE WAY THE LAW STATES YOU ARE SUPPOSED TO APPLY THEM. 

" The next payment of {$68.00} is due on XX/XX/XXXX. '' THIS PAYMENT WAS PROCESSED BY YOU ON XX/XX/XXXX, WHICH WAS FOR THE XX/XX/XXXX PAYMENT YOU ARE REFERRING TO, AS IF I HAVEN'T PAID. AGAIN, IT CLEARLY WAS NOT APPLIED TO THE NEXT PAYMENT DUE. NOTE THAT THIS POSTED AFTER MY COMPLAINT WAS FILED AND WELL BEFORE YOU MADE THESE ADJUSTMENTS. 
YOU ARE AGAIN SAYING I MISSED A PAYMENT, AND HAVE AGAIN RAISED MY INTEREST RATE. 

" To prevent any future recurrence on this matter, we strongly advise setting up direct debit payments on your account or enabling autopay on this order. " SO YOU ARE SAYING THE ONLY WAY I WILL NOT HAVE PROBLEMS WITH MY PAYMENTS BEING APPLIED THE WAY THEY ARE LEGALLY SUPPOSED TO BE APPLIED IS TO USE YOUR AUTOPAY SYSTEM. 

PLEASE NOTE MY ORIGINAL LOAN AGREEMENT WITH XXXXKLARNA STATES " autopayment is not required. '' ( SEE BELOW ) " With check payments, it is expected that the payment will be applied to the end of the loan as a principal reduction, and this will happen again if you choose to pay by check moving forward. '' ON XX/XX/XXXX, THE {$75.00} ACH PAYMENT FROM MY BANK WAS APPLIED FIRST TO THE {$68.00} DUE FROM XX/XX/XXXX ( WHICH WAS OVERDUE DUE TO YOUR SYSTEM ERRORS ) AND THE EXTRA {$6.00} WAS APPLIED TO THE PRINCIPAL. SO YOU ESTABLISHED A REASONABLE EXPECTATION THAT MY FUTURE PAYMENTS WOULD BE ALLOCATED IN THE SAME MANNER. 

AGAIN, LET ME REMIND YOU, I AM PAYING BY ACH DIRECTLY FROM MY BANK TO KLARNA. I AM NOT PAYING BY CHECK. 

MOST IMPORTANTLY, WHAT IS EXPECTED - NOT ONLY AS AN AS AN INDUSTRY STANDARD - BUT IS ALSO THE LAW, IS STATED ON THE KLARNA WEBSITE, AND IS STATED IN THE CONTRACT I SIGNED ON XX/XX/XXXX IS THAT PAYMENTS MADE ON CREDIT ACCOUNTS ARE APPLIED TO THE NEXT PAYMENT DUE, NOT THE LAST PAYMENT DUE. ONLY THE EXCESS CAN BE APPLIED ELSEWHERE, IN MY CASE, TO THE PRINCIPLE. KLARNA 'S OWN WEBSITE, AS REFERENCED BELOW, STATES : " We will use each payment in the amount of the Minimum Payment Due or less to pay your balances from oldest to newest '' THE ONLY TIME ENTIRE PAYMENTS CAN GO TO THE PRINCIPAL IS AT THE CARDHOLDERS REQUEST. I HAVE NOT REQUESTED THIS. 

HERE IS DOCUMENTATION FROM THE ORIGINAL LOAN AGREEMENT I SIGNED WITH XXXX/KLARNA, THE LAW FROM THE FDIC, AND FROM THE LEGAL PORTION OF KLARNA 'S WEBSITE SHOWING YOU ARE EITHER LYING, ARE MISINFORMED, OR YOU ARE INTENTIONALLY TRYING TO MISLEAD ME. 

THE LOAN AGREEMENT FROM XX/XX/XXXX STATES : 5. Payment Methods We will accept payments in U.S. dollars via ACH, or physical check, or any other payment method we make available. You may not make payments in cash or coin. We may require you to select a payment method when you apply for a loan, but autopayment is not required. 

THE LAW : FDIC 6000 - Consumer Protection CHAPTER 4CREDIT BILLING 164.Prompt and fair crediting of payments ( a ) IN GENERAL. -- Payments received from an obligor under an open end consumer credit plan by the creditor shall be posted promptly to the obligor 's account as specified in regulations of the Bureau. Such regulations shall prevent a finance charge from being imposed on any obligor if the creditor has received the obligor 's payment in readily identifiable form by XXXX XXXX on the date on which such payment is due in the amount, manner, and location indicated by the creditor to avoid the imposition thereof. 
b ) APPLICATION OF PAYMENTS. 
( 1 ) IN GENERAL. -- Upon receipt of a payment from a cardholder, the card issuer shall apply amountsin excess of the minimum payment amountfirst to the card balance bearing the highest rate of interest, and then to each successive balance bearing the next highest rate of interest, until the payment is exhausted. 

https : XXXX # XXXX FROM THE KLARNA WEBSITE : 7. Payment Application and Prepayment We will use each payment in the amount of the Minimum Payment Due or less to pay your balances from oldest to newest.

You may at any time pay the total unpaid balance without any additional charge for prepayment. If you pay more than the Minimum Payment Due in any Billing Cycle, you still must make the Minimum Payment Due the next Billing Cycle. We will use any amount in excess of the Minimum Payment Due to pay the balances with the highest interest rate, then the next highest interest rate, and so forth. However, during the two Billing Cycles immediately preceding the Expiration Date of any Deferred Interest Purchase, we will use such excess payments first to pay the balance on such Deferred Interest Purchase. 

https : XXXX? XXXX " If you choose the check payment option, you will have to contact Klarna customer service to ensure the payment is applied to the current month. '' AGAIN, I AM PAYING BY ACH DIRECTLY FROM MY BANK TO YOU. 
I AM NOT PAYING BY CHECK. 

THE WHOLE BASIS OF MY COMPLAINT IS THAT I HAVE BEEN CONTACTING KLARNA CUSTOMER SERVICE REGULARLY SIMPLY TO HAVE MY PAYMENTS APPLIED THE NEXT PAYMENT DUE, BUT HAVE HAVE BEEN MET WITH A REFUSAL TO DO SO ON EVERY FRONT. 

HERE ARE THE DATES AND METHODS I HAVE CONTACTED KLARNA BY CHAT : 3 TIMES XX/XX/XXXX, XX/XX/XXXX ( XXXX XXXX hours ) XX/XX/XXXX BY PHONE : 2 TIMES XX/XX/XXXX, XXXX minutes XX/XX/XXXX XXXX minutes BY EMAIL : 7 TIMES XX/XX/XXXX, XX/XX/XXXX XX/XX/XXXX XX/XX/XXXX XX/XX/XXXX XX/XX/XXXX XX/XX/XXXX THROUGH CONSUMER FINANCE PROTECTION BUREAU : XX/XX/XXXX, XX/XX/XXXX, & NOW " Our records indicate the following payments have been applied to your account : - The down payment of {$60.00} was made on XX/XX/XXXX with the XXXX ending in XXXX " THIS IS PROOF THAT I HAD CORRECTLY INPUT MY DEBIT CARD AND IT SUCCESSFULLY WENT THROUGH. EMAIL PAYMENT REMINDERS FOR THE XX/XX/XXXX PAYMENT CLARIFIED THIS ACCOUNT WOULD BE CHARGED WITH NO INDICATION OF ANY STEPS NECESSARY. 

A check payment of {$75.00} was applied to the order on XX/XX/XXXX. - A second check payment of {$75.00} was applied to the order on XX/XX/XXXX. - A third check payment of {$75.00} was applied to the order on XX/XX/XXXX. - A fourth check payment of {$75.00} was applied to the order on XX/XX/XXXX. 
The remaining outstanding balance left to pay on this order is {$480.00} and the next minimum payment of {$68.00} is due on XX/XX/XXXX. 

WHAT HAPPENED THE AMOUNT IN EXCESS OF THE {$68.00} FOR EACH OF THESE PAYMENTS? THE DATA YOU ARE PROVIDING IS INCOMPLETE. 

ALSO, WHILE YOU WERE ANALYZING MY ACCOUNT BETWEEN XX/XX/XXXX AND YOUR RESPONSE ON XX/XX/XXXX, A FIFTH {$75.00} PAYMENT WAS PROCESSED BY YOU ON XX/XX/XXXX WHICH WAS FOR THE MAY PAYMENT YOU REFER TO ABOVE, AND WAS AGAIN NOT PROPERLY APPLIED TO THE NEXT PAYMENT DUE. THE ENTIRE {$75.00} WAS AGAIN INCORRECTLY APPLIED TO THE PRINCIPAL. 
I EMAILED YOUR CORRECTIONS DEPARTMENT. 

We believe this fully addresses any concerns, but should you have any additional questions you are welcome to contact us by phone at ( XXXX ) XXXX from XXXX XXXX, Monday - Friday, or via XXXX chat at www.klarna.com/us. 

YOU CLEARLY HAVE NOT ADDRESSED MY CONCERNS. YOU APPEAR TO NOT HAVE DONE YOUR RESEARCH AND HAVE NOT MADE AN EFFORT TO PROVIDE ME ANY DOCUMENTATION. 

IT IS AN UNREASONABLE REQUIREMENT THAT I CONTACT KLARNA CUSTOMER SERVICE TO HAVE MY PAYMENTS APPLIED CORRECTLY. IN FACT, THIS HAS TURNED INTO AN UNNECESSARY BURDEN ON ME, CAUSING ME UNDUE STRESS AND ANXIETY. I HAVE LOST OVER 40 HOURS OF TIME OVER 4 MONTHS AND COUNTING, TRYING TO GET THIS RESOLVED. 

As result of you illegally applying my entire payment to the principle, WHICH I HAVE REPEATEDLY INSISTED YOU NOT DO, it results in your system registering my payment as late, and in turn you increasing my interest rate, and also results in a negative impact on my credit rating. 

YOU HAVE FAILED TO PROVIDE ME EVIDENCE OF THE POLICY YOU ARE FOLLOWING IN THE APPLICATION OF MY PAYMENTS. 

ON XX/XX/XXXX AT XXXX XXXX  IN YOUR CHAT APP I ASKED : " Please provide me with documentation that states that a payment I have made, that you have accepted, does not apply to current payment, but instead applies to payments at the end of the contract. '' YOU HAVE NOT PROVIDED IT IN ANY OF OUR CORRESPONDENCE. IN FACT, THE PREPONDERANCE OF EVENCE SHOWS THAT THERE IS NO SUCH POLICY OR " EXPECTATION '' AT KLARNA, OR ELSEWHERE IN THE FINANCIAL WORLD. 

SO AGAIN : I am requesting THE FOLLOWING : 1 ) all of my future {$75.00} payments to be AUTOMATICALLY APPLIED to the next payment due, and then ONLY THE EXCESS BE APPLIED TO PRINCIPAL 2 ) the XX/XX/XXXX {$75.00} payment to be applied TO the XX/XX/XXXX payment due AND ONLY THE EXCESS BE APPLIED TO THE PRINCIPAL 3 ) for all of my payments to reflect as being paid on time 3 ) for Interest be calculated as IF ALL PAYMENTS WERE MADE ON TIME. 



IF YOU REFUSE TO HONOR MY REQUEST, YOU ARE ACCUSED OF FALSE ADVERTISING, OF TRYING TO MISLEAD ME, OF MISALLOCATING MY PAYMENTS INTENTIONALLY, AGAINST MY WILL, IN ORDER TO INCREASE THE INTEREST YOU ARE COLLECTING FROM ME, OF TRYING TO COERCE ME INTO USING YOUR OWN AUTOPAY SYSTEM, AND FOR CAUSING ME UNDUE DISTRESS.

Company public response: Company believes complaint represents an opportunity for improvement to better serve consumers
Company response to consumer: Closed with monetary relief