Klarna faces Dutch class action over buy now, pay later practices

A Dutch non-profit foundation has filed a class action lawsuit against Klarna, challenging the Swedish buy now, pay later provider’s treatment of consumer payments and related fees, according to NL Times. The Mass Damage & Consumer Foundation estimates that repayments sought for consumers could exceed €500 million.

The claim centres on whether Klarna’s product should be treated under lender rules. Lucia Melchert, chairwoman of the foundation, told NL Times that Klarna offers what is “essentially just a loan.”

Buy now, pay later services allow shoppers to receive goods or services before paying the full purchase amount. The legal and regulatory dispute described by the foundation turns on whether that deferred payment structure should trigger obligations that apply to credit providers, including checks on whether customers can afford the debt and disclosures about risks.

The foundation alleges that Klarna has not complied with strict rules for lenders. According to the lawsuit as described by NL Times, the company failed to conduct adequate creditworthiness assessments and did not properly warn users about the risks attached to the product.

The suit also alleges that Klarna handled disputed claims, product returns and fraud cases carelessly. The foundation further argues that the service is too accessible to minors.

Claim seeks consumer reimbursements

The Mass Damage & Consumer Foundation is seeking repayment of what it calls unjustified costs charged to consumers. The categories cited by the foundation include purchase amounts, reminder fees, fines and collection costs.

The foundation’s estimate of more than €500 million indicates the scale of potential consumer exposure it believes is involved. The figure is the foundation’s estimate and has not been established by a court.

Klarna is one of the best-known European companies in the buy now, pay later sector. The case adds to scrutiny of the model in the Netherlands, where policymakers have already raised concerns about the expansion of deferred-payment services beyond online checkout.

Last year, the Dutch government asked Klarna to reconsider plans to expand into physical shops, according to Finextra. The government’s move was aimed at limiting the spread of buy now, pay later services on the high street.

The lawsuit places Klarna’s operating model under examination in a market where consumer-credit rules, payments innovation and retail finance increasingly overlap. If a court accepts the foundation’s argument that the service should be treated as lending, the case could test how existing consumer protection obligations apply to deferred-payment products.

The allegations remain claims brought by the foundation. The outcome will depend on the legal process in the Netherlands and any findings made by the court.

This story draws on original reporting from Finextra Research.