Credit Karma to pay $3M over ‘deceptive’ credit card offers

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Credit Karma credit card offers FTC settlement overview: 

• Who: Credit Karma has agreed to pay $3 million to resolve claims made against it by the Federal Trade Commission (FTC). 
• Why: The FTC claimed Credit Karma harmed consumers by tricking them into applying for “pre-approved” credit offers they didn’t actually qualify for. 
• Where: Credit Karma is used by consumers nationwide. 

Credit Karma agreed to pay $3 million to resolve claims made by the Federal Trade Commission (FTC) that the company tricked consumers into applying for “pre-approved” credit offers. 

The FTC alleged that, from February 2018 to April 2021, the company would induce its customers into applying for Credit Karma credit offers that they “ultimately did not qualify for” despite telling them they would have a 90% chance of being accepted. 

Credit Karma operates as a credit monitoring and reporting service that uses consumers’ personal information to create a credit profile that can be used to facilitate targeted advertisements and credit card recommendations. 

The FTC accused Credit Karma of violating the Federal Trade Commission Act and harming consumers by tricking them into taking actions that were in the best interest of the company but that led to the consumers themselves being harmed — a tactic known as ‘dark patterns.” 

In addition to the $3 million, which will go toward compensating consumers who “wasted time” applying for the credit cards, Credit Karma has agreed to stop making deceptive claims about credit offers, according to the FTC. 

Consumers who applied for Credit Karma credit card offers and were subsequently denied had their credit scores potentially damaged unnecessarily, according to the FTC. 

Credit Karma credit card offers cost consumers ‘time’ with false claims, FTC says

“Credit Karma’s false claims of ‘pre-approval’ cost consumers time and subjected them to unnecessary credit checks,” says Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a statement. “The FTC will continue its crackdown on digital dark patterns that harm consumers and pollute online commerce.”

As part of the settlement, Credit Karma will also be required to preserve records of any “market, behavioral or psychological research or user, customer or usability testing, including any A/B or multivariate testing, copy testing, surveys, focus groups, interviews, clickstream analysis, eye or mouse tracking studies, heat maps or session replays or recordings,” according to the FTC. 

In related FTC news, last month, the commission filed a complaint against Axis LED Group LLC and ALG-Health LLC over claims the companies falsely labeled personal protection equipment they manufactured as “Made in USA” when it was actually produced in China. 

Have you applied for Credit Karma credit card offers you didn’t ultimately qualify for?  Let us know in the comments! 

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