Credit Karma Settles With FTC for $3M Over Deception Claims

Credit Karma used “dark patterns” to mislead and entice consumers to apply for credit card offers they often didn’t qualify for, the FTC announced in a settlement with the credit services company Thursday. The commission voted 5-0 to issue a proposed settlement requiring the company to pay $3 million to consumers for their “wasted time” applying and to “stop making these types of deceptive claims,” the agency said. The agency alleged Credit Karma “used claims that consumers were ‘pre-approved’ and had ‘90% odds’ to entice them to apply for offers that, in many instances, they ultimately did not qualify for.” The company’s deception resulted in unnecessary credit checks and harm to consumers’ credit scores, the FTC said: About one-third of some preapproved offers resulted in denied applications. Credit Karma fundamentally disagrees with the FTC’s claims but reached the settlement to “avoid disruption to our mission and maintain our focus on helping our members find the financial products that are right for them,” said Credit Karma Chief Legal Officer Susannah Wright. The allegations focus on “historical use of the term ‘pre-approved’ for a small subset of the credit card and personal loan offers available on Credit Karma’s platform prior to April 2021, and do not challenge the approval odds language Credit Karma has provided to its members since April 2021,” the company said.