Problem is the invoice itself is real. You have to contest it actively to the debt collector and give at least some evidence as to why the debt is invalid. If you do not actively contest the collection, it will soon end up in court. This is a very routine case for a district judge where they will give a default judgement in favor of the plaintiff.

The problem is that the law in Finland is written so that even if the collection is baseless the supposed debtor needs to actively manage it or end up in legal jeopardy. Which is rather unfair if you are a victim of identity theft.

This was probably already common fraud in Finland before Klarna if that’s what the law says - but Klarna would be a crazy force multiplier for the fraudsters and no help for the defrauded, so it becomes a much more pressing issue.

(No knowledge of the details, just speculation based on the discussion here)

Nordics have really poor laws around this. We have these payday loan companies that work under the same principle. Klarna just found a way to conveniently do the same. It is easier to capture buyers at the counter rather than before the counter. Effectively Klarna is a payday loan company in the Nordics and has nothing to do with easy checkout. In fact, they used to offer kickbacks to merchants, so every time someone chose Klarna invoice they would pay the merchant instead of charging for it, because they get so good profit from the individuals due to poor laws.

... and as always, trust works really well, despite the occasional fraud, until someone finds a way to exploit it at industrial scale. And then it fails spectacularly.

> If Klarna were actually on the hook for their own money

Aren't they?

> it wold only have to happen a few times before they realize it's not worth it

That's an assumption. Someone did some A/B testing and said this payment flow results in X% increased sales, resulting in Y% more revenue for Klarna, it results in Z% more fraud. I don't even object to this per-se.

If Y is greater than Z, they will do it.

If they are especially awful they will consider that of the Z% of fraud it will result in A% still being paid for and B% being recovered in debt collection. That is awful.

> results in Z% more fraud

They would probably not measure fraud but just losses directly.