The Federal Trade Commission (FTC) is stepping up to credit services company Credit Karma and ordered the company to pay $3 million to consumers for misleading them with allegedly false “pre-approved” credit offers.

“Credit Karma’s false claims of ‘pre-approval’ cost consumers time and subjected them to unnecessary credit checks,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will continue its crackdown on digital dark patterns that harm consumers and pollute online commerce.”

According to FTC, Credit Karma falsely told many customers that they had been “pre-approved” for credit offers from February 2018 to April 2021. The FTC said Credit Karma knew that its purported “pre-approvals” conveyed false “certainty” to consumers.

The FTC said the company conducted experiments, also known as A/B testing, showing that consumers were more likely to click on offers saying “preapproved” than those saying they had “excellent” odds of being approved. The commission says these types of design tricks have been described as “dark patterns.”

The complaint alleges that Credit Karma’s conduct harmed consumers by:

• Deceiving them about whether they were approved: Despite Credit Karma’s claims that consumers were “pre-approved,” for many offers, almost a third of consumers who applied were in fact denied. Credit Karma often only revealed the possibility of denial in buried disclaimers or false claims that consumers had “90% odds” of approval. Credit Karma...

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