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Credit Karma ordered to pay fine for false ‘preapproval’ offers

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Have you ever gotten one of those “preapproval” credit offers despite not having good credit? If so, you might be entitled to part of a $3 million fine imposed by the Federal Trade Commission.

Last week, the FTC ruled that Credit Karma deceived customers by saying they were preapproved for loans and credit cards. The FTC alleged that Credit Karma wasted consumers' time and, in some cases, rejected applications caused lower credit scores.

“Credit Karma’s false claims of ‘preapproval’ 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.”

The FTC alleged that Credit Karma knew consumers were likelier to click on offers that said they were “preapproved.”

“Credit Karma often only revealed the possibility of denial in buried disclaimers or false claims that consumers had “90% odds” of approval,” the FTC said. “Credit Karma was aware that its consumers were misled: for example, its own customer service training materials cited “I was declined for a preapproved credit card offer .... How is that possible?!?!?!” as a common issue representatives would encounter.”

In addition to paying a $3 million fine, the FTC also ordered Credit Karma to stop using deceiving marketing tactics.

The FTC did not say how the fine would be distributed to consumers.