Uutiset
Jul 13, 20213 min. lukuaika

How Klarna works to counter fraud – 97% decrease in our fraud rate.

Tekijä Jacob Segercrantz

Due to an article published by Yle there has been an important conversation today about online fraud, security and safe online shopping, as well as our role in this. I would like to thank you for the valuable discussion and clarify Klarna’s own practices regarding secure online shopping as a global, fully licensed bank. We take this issue very seriously and are always exploring new ways to make shopping even safer using our service. Our work has also given results. As you can see in the graph below the rate of frauds using Klarnas services has decreased by more than 97% for the last two years. Unfortunately we can’t disclose exactly what kind of measures we have put in place during this time, we don’t want to educate any fraudsters.

Klarna's fraud rate per month in Finland

Indexed – fraud rate per month: 2019-01-01 – 2021-07-01

The graph shows the share of fraud in relation to the number of transactions using Klarnas payment methods. The spike in fraud rate during 2019 was caused by an international group of fraudsters specifically targeting one of our merchants. Since then, Klarna has successfully implemented additional layers of security to mitigate fraud and ensure that Finnish consumers stay protected.

What happens when I make a purchase?

Klarna is a fully licensed bank operating in 20 countries and supervised by the financial authorities and Swedish DPA. Our over 90 million customers make more than 2 million purchases using Klarna’s service every day. When the company was founded in 2005, our aim was to make online shopping both safer and more convenient.

A purchase via Klarna is assessed and reviewed repeatedly in a process that starts already when the customer opens our checkout. We do all this in real time and use thousands of data points to identify risky transactions and prevent fraud even before they have been completed, so a purchase is not accepted based solely on your zip code and email address that Yle is stating. In the event that something should slip through anyway, we are not content there, but continue to monitor all purchases throughout the life of the transaction and if we suspect a fraud we immediately prompt strong authentication. At the slightest indication that something is not right, other processes start where we ourselves and in collaboration with other actors do everything we can to prevent the possible completion of a crime.

We assure our customers that they will never have to pay a Klarna invoice if they are exposed to fraud. Klarna always carries this risk.

We also want to stress that money never leaves the consumer without Klarna pushing for strong authentication. We always require strong authentication whenever money is being transferred – either at point of purchase in the checkout or later when paying for an invoice in the Klarna app.

As one of Europe’s largest banks, we understand our responsibility – and it goes without saying that we will continue working towards safe online shopping. Our team is looking into new measures to increase Klarna’s safety and security, which will be communicated externally later, and we have opened discussion with the Finnish DPA. We still believe that online shopping can be both safe and smoooth – not just one or the other.