Not upheld: Fraud reimbursement (APP scams) complaint against Klarna Financial Services UK Limited

Decision detail

Summary

Miss P complained that Klarna failed to adequately protect her account after fraudsters gained unauthorized access and made transactions to two retailers in January 2025. Klarna escalated the matter to its specialist team, kept Miss P updated through multiple contacts, and ultimately confirmed on 2 May 2025 that she would not be charged and would receive a refund for any repayments made. Miss P sought £10,000 compensation, claiming Klarna had insufficient security measures. The ombudsman found that the fraud resulted from a criminal act (SIM/phone cloning) rather than Klarna's negligence, and that Klarna's response was reasonable and appropriate. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman acknowledged that fraud is a criminal act and that despite robust security measures, fraudsters employ increasingly sophisticated methods to bypass financial institutions' systems. The ombudsman found no evidence of negligence on Klarna's part. Klarna responded appropriately by escalating the matter quickly, keeping Miss P updated, ensuring she was not liable for unauthorized transactions, and providing a full refund after investigation. The account restriction during investigation was reasonable to prevent further fraud. Being a victim of fraud does not automatically entitle a consumer to compensation beyond the refund of unauthorized transactions. The ombudsman noted that Klarna offered alternative verification methods when Miss P was uncomfortable with email verification.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website