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Credit Karma to Pay $3M to Users for False Preapproved Offers, File Claim Now
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Credit Karma Settlement
đ Update: The FTC is sending notices to 497,425 people who may be eligible for a payment if they were denied credit after responding to an offer from Credit Karma that said they were âpre-approvedâ or had a â90% oddsâ of approval. If you get a letter or email with a claim number, you can apply for a payment online at secure.creditkarmasettlement.com. If you donât have a letter or email with claim ID, then you can email info@CreditKarmaSettlement.com or call 866-848-0871 to get one. To be eligible, you must file a claim by March 4, 2024.
The Federal Trade Commission (FTC) has ordered Credit Karma to pay its users $3 million after pushing false preapproved credit cards on consumers and harming their credit scores.
The FTC alleges that the company used claims that consumers were âpre-approvedâ and had â90% oddsâ to entice them to apply for offers that, in many instances, they ultimately did not qualify for.
âCredit Karmaâs false claims of âpre-approvalâ cost consumers time and subjected them to unnecessary credit checks,â said Samuel Levine, Director of the FTCâs Bureau of Consumer Protection said in a statement.
Credit Karma provides tools that allow consumers to monitor their credit scores and credit reports. To use Credit Karmaâs services, consumers must provide the company with a variety of personal information, allowing Credit Karma to amass over 2,500 data points on each consumer, including credit and income information. Credit Karma then uses that information to send targeted advertisements and recommendations for credit cards.
The FTCâs proposed complaint alleges that, from February 2018 to April 2021, Credit Karma falsely told many consumers that they had been âpre-approvedâ for credit offers, leading consumers to apply, incur a hard inquiry on their credit reports, and, if they are denied, potentially damage their credit scores unnecessarily. According to the FTCâs complaint, Credit Karma knew that its purported âpre-approvalsâ conveyed false âcertaintyâ to consumers. The company knew that consumers were more likely to click on offers saying âpreapprovedâ than those saying they had âexcellentâ odds of being approved.Â
Related:Â See All Settlement Rebates Here
Under the FTC Act, the FTC has the authority to take action against companies for engaging in unfair and deceptive acts or practices. The FTCâs proposed order against Credit Karma requires the company to:
- Stop deceiving consumers:Â The FTCâs order prohibits Credit Karma from deceiving consumers about whether they are approved or pre-approved for a credit offer, as well as about the odds or likelihood that a consumer will be approved for a credit offer.
- Pay $3 million in consumer redress:Â The order requires Credit Karma to pay $3 million to the FTC, which will be sent to consumers who were harmed by the companyâs actions.
- Preserve records: To help prevent further use of deceptive dark patterns, the order requires Credit Karma 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.
You can read the agencyâs full order here.
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