Has Klarna had a publicly reported AI incident?
Yes. As of Oct 21, 2026, the register holds 3 publicly reported AI incidents at Klarna since January 2022. The most recent is "Pagaya sues Klarna, alleging it 'distilled' and misappropriated its AI underwriting model" (May 13, 2026), status: disputed, severity 2 of 5. Last swept Oct 21, 2026 (15 queries).
| Date | Institution | Incident | AI? | Role | Category | Severity | Status |
|---|---|---|---|---|---|---|---|
| May 13, 2026 | Klarna, Pagaya Technologies | Pagaya sues Klarna, alleging it 'distilled' and misappropriated its AI underwriting model | AI (stated) | Governance finding | Litigation | 2 | Disputed |
| Jan 2026 | Klarna | Klarna processed payments for nine months for shops advertising with celebrity deepfakes | ML (inferred) | AI used against the institution | Deepfake fraud | 2 | Reported |
| May 8, 2025 | Klarna | Klarna resumes hiring human agents after AI-first customer service produced 'lower quality' | AI (stated) | Institution's own AI | AI job-cut reversal | 2 | Confirmed by the institution |
May 13, 2026 · Governance finding · severity 2/5
Pagaya sues Klarna, alleging it 'distilled' and misappropriated its AI underwriting model
Pagaya, an AI underwriting fintech that had assessed subprime point-of-sale loan applicants for Klarna since 2022, sued Klarna in Delaware federal court on 13 May 2026. According to the complaint, Klarna "distilled Pagaya’s core underwriting technology for POS loans and then willfully misappropriated its trade secrets", including its proprietary machine-learning credit model, to build a US consumer lending business worth about $2 billion. The complaint also alleges breaches of the license, loan-sale and commitment agreements. Klarna, which ended the relationship on 25 March 2026, said the suit is without merit and the allegations are false. In July 2026 it moved to dismiss part of the complaint. The case is pending.
Jan 2026 · AI used against the institution · severity 2/5
Klarna processed payments for nine months for shops advertising with celebrity deepfakes
TV4's investigative programme Kalla fakta reported on 23 February 2026 that Klarna had for nine months served as a payment method for webshops run by a Dutch company that sold so-called miracle pills, claimed to cure cancer and epilepsy, using AI-generated deepfake videos of Swedish celebrities. According to TV4, Klarna ended the cooperation in January 2026 only after the programme contacted it, and also cut off ten further shops making illegal health claims. Chief executive Sebastian Siemiatkowski called the fraud "terrible" but said legal responsibility lay mainly with the acquirer between Klarna and the shops. Finansinspektionen's deputy director general said the regulator would take action if it saw a need. No loss total has been reported.
May 8, 2025 · Institution's own AI · severity 2/5
Klarna resumes hiring human agents after AI-first customer service produced 'lower quality'
Klarna said in February 2024 that its OpenAI-powered assistant was handling two-thirds of customer-service chats, the equivalent work of 700 full-time agents. On 8 May 2025 chief executive Sebastian Siemiatkowski told Bloomberg that cost had been "a too predominant evaluation factor" and "what you end up having is lower quality", and that Klarna would recruit people so customers could always reach a human; a spokesperson confirmed a pilot of flexible human agents to CX Dive. The reversal was partial: Klarna told Fortune it was "very much still AI-first", and its 2025 annual report on Form 20-F says the assistant handled 80% of customer-service chats that year. No customer losses or regulatory action were reported.
Entries come from the register of AI incidents at banks: events since January 2022, each sourced to two independent publishers or one official or court document, with the institution's response recorded. A sweep searches news, regulator, court and security sources for the institution by name; its date, query count and result are logged on the register's method section.
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