Consumer complaint received 2025-08-21 00:00:00
Product: Payday loan, title loan, personal loan, or advance loan — Installment loan
Issue: Problem when making payments — 
Company: Klarna AB
State: GA

Complaint narrative:
On XX/XX/year>, I purchased custom-colored hair extensions from XXXX XXXX XXXX XXXX Klarnas installment loan product. The total transaction was over {$1000.00}, of which {$610.00} was financed through Klarna for the hair itself. 

The product was installed on XX/XX/year> by a professional stylist. Within hours, the hair began tangling, matting, frizzing, and losing its curl pattern, making it completely unwearable despite proper care. I notified the merchant the same night ( XX/XX/XXXX at XXXXXXXX XXXX ) and again the following day. The merchant admitted trimming errors but refused to provide a remedy or refund. 

I escalated the matter to Klarna and submitted full documentation, including receipts, screenshots of my messages with the seller, installation proof, and photos of the defective product. 

Klarnas responses : - Klarna informed me that they can only inquire with the store whether they have correctly rendered the services to you and that because the merchant provided proof of service, Klarna would not issue a refund. 

- Klarna then forgave {$310.00} of the financed balance but is withholding my refund of {$300.00}, despite acknowledging that the dispute had merit. 

Why I disagree : - Klarnas position effectively places all decision-making power with the merchant, leaving the consumer unprotected even when evidence shows the product is defective. The fact that a service was performed ( installation ) does not negate the sellers duty to provide hair that is fit for its intended use. 

- Klarnas partial forgiveness of {$310.00} demonstrates that Klarna recognized an issue with the transaction, yet their refusal to refund the remaining {$300.00} is inconsistent and arbitrary.

If the product was defective, all financed charges related to it should have been forgiven.

Klarnas response disregards consumer protection laws that require goods to be fit for ordinary use and for disclosed purposes. By continuing to collect {$300.00} for defective goods, Klarna is engaging in unfair billing practices.

Legal basis for refund under Georgia law : O.C.G.A. 10-1-393 ( Fair Business Practices Act ) prohibits unfair or deceptive practices, including failure to disclose material information. 

O.C.G.A. 11-2-314 ( Implied Warranty of Merchantability ) requires goods to be fit for their ordinary purpose ; this hair was not.

O.C.G.A. 11-2-315 ( Implied Warranty of Fitness for a Particular Purpose ) applies because I relied on the sellers expertise for hair that could be worn straight and curly ; the seller was aware of this purpose but provided hair that did not meet that standard. 

Given Klarnas role as the financing company, continuing to bill me for goods that legally fail under these implied warranties is improper. I am requesting a refund of the remaining {$300.00} financed through Klarna, and I urge the CFPB to require Klarna to adjust its practices so consumers are not left paying for defective products when merchants refuse accountability.

Company response to consumer: Closed with explanation