Identity fraud victims on the hook for big fines

Harsha Vaja was mystified when three parcels arrived at her home in November.

Her daughter, Rupal, was not expecting any orders. However, Rupal’s name and another, ‘Arron Gayle’, were printed on the labels.

Minutes later, a man in his 20s turned up introducing himself as Arron, claiming his parcels were delivered to 60-year-old Harsha’s SouthEast London home by mistake

Growing threat: Identity theft soared 22% last year with 226,000 cases recorded in total, according to fraud prevention organisation Cifas

But it’s likely he was a fraudster who used Rupal’s details to apply for credit with the world’s biggest buy-now, pay-later (BNPL)lender.

Klarna sent four threatening letters to Rupal in January, demanding £1,083 and warning a debt collection agency could be assigned.

The civil servant, 31, quickly made the link between the letters and the parcels. Klarna wrote off the debt, realising the purchases were fraudulent, and said Rupal’s credit score would not be affected.

But Rupal feels ‘violated when I think about how my details were used by criminals’, adding: ‘Klarna’s checks clearly weren’t good enough.’

Rupal is a victim of identity theft — which soared 22 pc last year with 226,000 cases recorded in total, according to fraud prevention organisation, Cifas.

Klarna has amassed millions of customers by allowing shoppers to postpone payments interest-free.

It uses ‘soft credit checks’ — asking for names, emails, addresses, phone numbers and a valid method of payment to access its ‘Pay in 3’ service. 

The lender also has ‘200 fraud security experts monitoring systems 24/7’. Ministers plan to force BNPL lenders to report to credit reference agencies. Klarna has been providing customer data to these firms, voluntarily, for a month.

But experts are concerned the lender is not doing enough to confirm identities. Consumer champion Martyn James says: ‘Fraudsters will always exploit loopholes in security checks, so Klarna is potentially setting itself up for a tidal wave of fraud.’

In another case, Wil Lloyd was planning a wedding with fiance Adrian when Klarna claimed he owed it £479.41 for clothes.

The lawyer called the lender immediately after letters arrived at his London home in June.

Although the debt was cancelled, he was irritated by the ‘nonchalant tone’ of Klarna’s staff.

Wil, 37, says: ‘It just sounded as if this was something they dealt with all the time.’

A Klarna spokesman claims it receives ‘less than half’ as many fraud reports as a credit or debit card firm would. He says the lender is investigating Rupal and Wil’s cases, adding: ‘Fraud is an industry wide issue.

‘Klarna’s fraud policy ensures customers never pay for purchases they did not make and we treat every case as an opportunity to further improve our systems.’

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This post first appeared on Dailymail.co.uk