Klarna’s “buy now, pay later” service will be investigated by the UK’s data protection watchdog after it sent marketing emails to people who had never used it before.
The Office of Information Commissioners said it was making “inquiries” about the £8.22 billion Swedish company with 8.6 million customers in the UK after receiving more than 90 complaints from people who received its weekly deals by email on Monday.
Klarna later apologized in a follow-up email, saying that the newsletter was sent in error and that those who received it in error “were not added to a marketing database”.
The UK’s data protection watchdog received more than 90 complaints from people who received marketing emails on Monday (below) from Klarna despite never opting in to receive them
Since stricter data protection rules came into force in 2018, consumers must explicitly opt-in to receive marketing emails.
But it turns out that shoppers who didn’t use the buy-now-pay-later service also handed their details to Klarna when they made purchases elsewhere, where the Swedish fintech processes credit and debit card transactions for other retailers.
PayPal joins the pay later battle:
The already bustling ‘buy now, pay later’ space will see another entrant after PayPal announced it would allow shoppers to spread the cost of purchases between £45 and £2,000 over three interest-free instalments.
It’s the latest challenge for Klarna and for credit card providers in a sector that’s becoming increasingly popular and increasingly controversial, amid concerns that the model encourages people to spend money they don’t have.
The sector is currently being reviewed by the Financial Conduct Authority as part of a broader review of unsecured lending.
PayPal currently has 24 million customers in the UK and in July celebrated its strongest three-month period since separating from eBay in 2015, gaining 21.3 million new accounts.
It already offers the option of credit on offers of £99 or more which comes without interest for four months, like a credit card, but then charges an APR of 19.9 per cent.
But such is the popularity of the “buy now, pay later” model that it has renamed the “pay with credit” section of its website to its four-letter catchphrase, and will launch its own version of Klarna’s “pay with three” model from the end of this month.
A This is Money spokesperson said: ‘Klarna’s checkout technology is a product some retailers use to process payments on their website.
This means that Klarna processes all credit and debit card transactions for these retailers. When anyone uses Klarna’s payment technology, they agree to our Terms and Conditions and Privacy Notice, which allows Klarna to promote its products and services to them.
Klarna later apologized for incorrectly sent marketing emails, but recipients were concerned about how it obtained their details.
While the newsletter was sent in error, all recipients have agreed to our Terms and Conditions and Privacy Notice when using the Klarna payment method or when purchasing from a retailer that uses Klarna Checkout technology.
“No one who has opted out of receiving our marketing communications has received our newsletter.”
But although it said no one who chose not to participate was actually contacted on Monday, the ICO said companies should “only contact individuals for digital marketing purposes where consent has been given or, in limited circumstances, where they have an existing relationship.” with a customer. “.
One person who received the This is Money email said: ‘Although I don’t know how many marketing emails Klarna sends, I checked my inbox and it’s the first marketing email I ever got from them, so I guess if I I accidentally ended up on their list through my incompetence which I would have realized before now with all the emails.
“Searching for Klarna returns emails from two stores that they use for payments and that you ordered from.”
They added, “I certainly didn’t sign up for their marketing list. I’ve bought from other sites using their payments, but I think once I accidentally used their late payment facility because I clicked the wrong box, not knowing what it was – since then I’ve been careful to make sure I make the payment right away.
Companies should only contact individuals for electronic marketing purposes where consent has been given or, in limited circumstances, where they have an existing relationship with a customer.
Information Commissioners Office
“However, even if that somehow puts me in a different category, they still shouldn’t be allowed to send me marketing without opting in.”
The erroneously sent email sparked a second social media backlash against Europe’s most valuable fintech in three weeks, after a mess between it and two high-street retailers left thousands of new Microsoft Xboxes missing. Although credit check for financing.
Shoppers can submit an objective access request to Klarna to see what data they have, how they obtained it and where it is shared, while the ICO also said they can object to their data being used for marketing services.
“The right to object to direct marketing is stronger than any objections you can make about other uses of your data,” she said.
Klarna was recently caught up in a farce involving Microsoft’s new Xbox, after it partnered with GAME and Smyths Toys to handle pre-orders for the console. A failed error means doing credit checks on thousands of people and setting up direct debit for non-existent controllers
If you object, the Organization cannot reject your objection and must stop using your data for direct marketing purposes. For example, they can’t continue to use your data to try to sell or promote things to you.
If you are able to object, you must inform the Foundation directly that you do not want them to process your data. You need to explain why you think the organization should stop using your data in this way.
The ICO provides instructions on how to submit a subject access request and how to object to the use of personal data on its website.
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