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FTC finalizes order forcing Credit Karma to pay $3 million back to consumers and end misleading ‘pre-approved’ claims

Filing a complaint with the FTC can go a long way

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Photo (c) Delmaine Donson - Getty Images
When does “approved” or “pre-approved” mean just that?

In a ConsumerAffairs review of Credit Karma's credit card offers, Emily, of Macon Ga., said she found there were quite a few hoops to jump through. She said the loans the company pitched her as “approved” required filling out an application that promises it won't hurt your credit scores as well as APR and monthly payments which look great up front but turn out to be “crazy high.”

And what Emily experienced, the Federal Trade Commission (FTC) apparently found happening across the entire consumer credit landscape with Credit Karma. Following a public comment period, the agency finalized a consent order settling charges that Credit Karma deployed “dark patterns” to misrepresent that consumers were “pre-approved” for credit card offers – pre-approved as in as much as a 90% sure shot of getting a good deal on a loan. 

Unfortunately, many of the people who applied for the credit offers weren’t as credit-worthy as they should be and wound up with nothing unless they wanted to bite off more than they could chew on monthly payments. 

However, the FTC said Credit Karma benefited because it was able to gather over 2,500 data points on each consumer, including credit and income information. Credit Karma then used that information to send targeted advertisements and recommendations for financial products, like credit cards.

Credit Karma disagrees, but will pay a fine. Is that good enough?

The FTC’s consent order requires the company to pay $3 million that will be sent to consumers who wasted time applying for these credit cards. It also agreed to stop making deceptive claims.

“We fundamentally disagree with allegations the FTC makes in their complaint, but we reached this agreement to put the matter behind us so we can maintain our focus on helping our members find the financial products that are right for them,” a Credit Karma spokesperson told ConsumerAffairs.

But as recently as December 2022, consumers were still complaining about the company’s pitches.

“Got an offer for a guaranteed approval on a product where they would pay me $50 if I was not approved. So, I applied, hard inquiry made on my credit within seconds, and I was not approved,” Jason, of Media Ohio wrote

But that’s where he felt Credit Karma failed to follow through on its offer. 

“I then contacted them to get my $50 and they told me that I could not receive it because I did not qualify and that they could not find any applications for credit, he said. 

It’s important for consumers to complain when they feel like they were wronged

Jason doesn’t have the same clout as the FTC, but his finger-waving is what the FTC wants to hear about. It asks anyone and everyone to let it know when they run up against something that doesn’t seem fair and honest by submitting a concern at its complaint website.

Not only is it worth doing it for the sake of protecting other consumers, but in Credit Karma’s case, the ones who complained will share in that $3 million fine. 

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