Buy now, pay later fraud warning after crooks steal details to create accounts in your name

BRITS are being warned about fraudsters signing up for buy now, pay later services in their names.

The issue comes as crooks steal your personal details to then create accounts with providers such as Klarna.

Shoppers are being warned about fraudsters signing up for buy now, pay later services in their namesCredit: Alamy

For example, 26-year-old Stephanie McDaid told the BBC she received a £30 Klarna bill out of the blue one day, although she hadn’t bought anything.

She also received the parcel, a Topshop dress, as the crook accidentally sent it to her former address at her parent’s home.

After contacting Klarna, it was confirmed she was a victim of identity fraud.

To use Klarna’s pay later service, which defers payments for up to 30 days, shoppers only have to provide a name, email, date of birth, mobile and a billing address.

When customers sign up, they also undergo a soft credit check.

How to prevent identity fraud – and what to if you’ve been a victim

AMBER Burridge, head of fraud intelligence at Cifas, has shared the below tips on how to prevent fraud.

Never share personal or financial details on email, texts or over the phone
Provide as little information about yourself as possible on social media
Never be afraid to challenge a request if you cannot confirm it is legitimate
Remember that only criminals will try to rush or panic you into making a decision quickly

Martyn James of Resolver also suggests using secure password managers that will tell you if any have been compromised.

You should also check your bank and credit card statement and phone bill each month for suspicious transactions.

If you think you’ve been a victim of fraud and crooks have ordered goods in your name, check your credit report for any soft searches.

You can follow our guide on how to check your credit score for free.

You should also report it to Action Fraud and contact the buy now, pay later firm in question, whether it’s Klarna, Ladbuy or Clearpay.

In Stephanie’s case, fraudsters had signed up for the service using her details.

Campaigners and consumer experts are now raising concerns about how easy it’s become to sign up to pay now, pay later services in other names.

Alice Tapper, who runs the #KlarNAA campaign, told The Sun: “I have spoken to several hundred of consumers about these issues – a proportion of those have been victims of fraud with similar stories [to Stephanie].

“In some cases, it’s only when they receive a late payment letter or even a debt collection letter that they realise they’re victims of identity fraud.”

She added: “There’s nowhere near the same level of security that you’d expect when you log in to your credit card or bank account.”

Meanwhile, Martyn James of Resolver, added: “Increasingly, we’re hearing from people who have found that some businesses are making it too easy to set up fake accounts that can have very real consequences for the people whose data is being mis-used.

“When you reduce the number of checks you make to speed up creating new accounts, you increase the risk of fraudulent activity.”

According to fraud prevention service Cifas, identity fraud accounted for 60% of cases recorded in 2020.

Victims under the age of 21 were also more likely to be impersonated for online retail and telecoms products than any other sector.

Klarna declined to say how many incidents of fraud its customers reported in 2020, but a spokesperson said that the rates were “extremely low”.

It added to The Sun: “We work closely with authorities, merchants and logistics partners to combat any potential fraud that we identify.

“And we constantly review and update our fraud prevention methods to ensure we continually adapt to reduce fraud.”

These methods include internal algorithms to verify shoppers’ identities as well as credit reference agencies.

Klarna added that shoppers are covered by its buyer protection policy, which means that any money is refunded to fraud victims.

It comes as the financial regulator launched a review in September of unsecured credit, including “buy now, pay later” firms.

Buy now, pay later firms aren’t currently regulated, meaning consumers can’t go to the Financial Ombudsman if and when things go wrong.

Shoppers are being warned about spiralling into “unmanageable debt” after they spent £2.3billion through buy now, pay later services before Christmas.

Meanwhile, the firms also “trick shoppers into spending more“, Which? has warned.

Debt campaigners have also been left furious after Love Island stars plugged Klarna, getting Brits into debt.

Fury as Love Island stars Dr Alex, Dom Lever, and Anna Vakili plug ‘buy now, pay later’ site Klarna

This post first appeared on thesun.co.uk