Credit Karma Settlement Guarantees $2.5M FTC Payments To ‘Deceived’ Customers

Credit Karma is cooperating with the FTC even though it disagrees with the allegations.

The Federal Trade Commission (FTC) will pay Credit Karma customers a total of $2.5 million after claims that they were “deceived” by allegedly false “pre-approved” offers, CBS MoneyWatch reports.

Close to 51,000 customers who filed a claim before the March 2024 deadline will receive payments from the FTC following a two-year court battle.

In 2022, the agency first took action after one-third of customers who claimed they were “pre-approved” for credit by Credit Karma were actually denied. The FTC claimed the company only pre-approved customers in an attempt to entice them to apply for offers that they were unlikely to qualify for.

The FTC found a use of dark patterns, website or app designs used to mislead consumers. Some were told that they had “90% odds” of being approved for credit products. However, the agency said those practices wasted consumers’ time and potentially damaged their credit scores.

As conditions of the settlement, Credit Karma, which provides customers with tools to monitor credit scores and reports, agreed to stop making such claims in addition to compensation.

“We fundamentally disagree with allegations the FTC makes in their complaint, which relate solely to statements we ceased making years ago,” the company said Any implication that Credit Karma rejected consumers applying for credit cards is simply incorrect, as Credit Karma is not a lender and does not make lending decisions,” the company said in a statement to CBS MoneyWatch on Oct 31.

“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.”

Victims will receive their settlement payments in the mail or digitally via PayPal, depending on what was selected at the time of the claim filing. Those who selected checks must cash them within 90 days, and PayPal payments must be accepted within 30 days. Customers who have questions about payment and the refund process should contact JND Legal Administration or visit the FTC website.

The agency highlights that they never require sensitive information such as bank accounts or Social Security numbers to receive payment.

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