The Federal Trade Commission ordered consumer technology company Credit Karma Thursday to pay $3 million to redress false statements that made consumers believe they were pre-approved for credit offers, a misrepresentation the FTC says wasted consumers' time and hurt credit scores.
The $3 million will be sent to consumers who were harmed by the company’s actions from February 2018 to April 2021, according to a complaint from the FTC.
Credit Karma on Thursday said it disagrees with the FTC's allegations "about marketing terms that aren’t even in use anymore" for a small subset of its offers but reached this agreement "to avoid disruption to our mission."
The FTC says Credit Karma falsely told consumers they were "pre-approved" for credit offers or had 90% odds of approval from February 2018 to April 2021.
In reality, nearly one-third of the "pre-approved" offers resulted in denials. The only mention of the possibility of denial was buried in disclaimers or in false claims that there was a 90% chance of approval, the FTC said.
The agency alleges Credit Karma knew its messaging was misleading but found consumers were more willing to click on offers that were pre-approved.
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The FTC's complaint alleges that "numerous consumers" applied for credit card offers after falsely believing they were pre-approved.
The FTC said...
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