Credit Karma was instructed to pay users for “fake” credit card offers

The FTC complaint says that Credit Karma users wasted time and damaged their credit scores by applying for offers they weren’t actually “preapproved” for.

WASHINGTON — Credit karma was ordered by the Federal Trade Commission Paying its users $3 million for “falsely” leading some of them to believe they were pre-approved for credit card offers.

That’s what the FTC claimedfrom Feb. 2018 to April 2021, credit karma used claims that consumers were “pre-approved” and “90% likely” to accept them to try to convince them to apply for credit cards, which many didn’t actually qualify for.

The FTC complaint said nearly a third of consumers who applied for these “pre-approved” offers were turned down, further hurting their credit scores. It is not known how many people were affected in total.

Credit Karma announced this on Thursday It disagrees with the FTC’s allegations, but made the agreement “to avoid disruption to our mission and to keep our focus on helping our members find the financial products that are right for them.”

The company added that the allegations focused on “marketing terms that aren’t even used anymore.”

While Credit Karma allows users to monitor their credit information for free, it pays when customers are approved for credit or credit cards.

That FTC complaint alleged that when consumers applied for the “pre-approved” offers, third-party financial firms performed a “rigorous check” on their credit reports, ultimately causing consumers’ credit ratings to deteriorate.

“Credit Karma’s false claims of ‘pre-approval’ are costing consumers time and subjecting them to unnecessary credit checks,” Samuel Levine, director of the FTC’s Consumer Protection Bureau, said in a statement. “The FTC will continue to crack down on digital dark patterns that are hurting consumers and polluting online commerce.”

The FTC’s order says the $3 million should go to consumers who wasted time applying for the credit card offers. It is not yet known whether there will be specific criteria according to which Credit Karma customers will receive remuneration. Credit Karma was instructed to pay users for “fake” credit card offers

Laura Coffey

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