Credit Karma customers who were deceived by the credit service company so-called fake “pre-approved” offers will receive $2.5 million from the Federal Trade Commission (FTC).
The FTC announced Thursday that it would send payments to nearly 51,000 consumers who filed a valid complaint with the commission before the March deadline.
She first took action against Credit Karma in 2022, after claiming that about a third of some customers who had been “pre-approved” for credit by the company were actually turned down. The FTC claimed that Credit Karma pre-approved customers to trick them into applying for offers they likely wouldn’t qualify for. To do this, he allegedly used dark templates – website or app designs that could mislead consumers.
Credit Karma, which provides users with tools to monitor their credit scores and reports, told some users they had a “90 percent chance” of being approved for credit products, according to the FTC. Such practices wasted consumers’ time and could have harmed their credit scores, the agency said.
Credit Karma has agreed to an order from the FTC requiring it to stop making these types of claims, in addition to compensating those harmed by this practice.
“We fundamentally disagree with the allegations made by the FTC in its complaint, which relate solely to statements we stopped making years ago. Any implication that Credit Karma rejected consumers’ credit card applications is simply incorrect because Credit Karma is not a lender and does not make credit card loan decisions,” the company said in a statement to CBS MoneyWatch.
“We entered into this agreement to put this matter behind us and to be able to continue to focus on helping our members find the financial products that are right for them,” the company said.
