The FTC is sending over $2.5 million to more than 51,000 Credit Karma customers following a recent settlement. This update brings exciting news to individuals affected by the misleading practices of the popular credit-monitoring and finance app.
Back in 2020, the Federal Trade Commission (FTC) took decisive action against Credit Karma, which had been acquired by financial software giant Intuit that same year. The core issue revolved around accusations of misleading consumers with false promises related to credit card pre-approvals.
Credit Karma to Pay $3 Million for Misleading Claims
The FTC revealed that Credit Karma falsely assured consumers they were “pre-approved” for specific credit card offers when, in reality, they did not qualify. This deceptive practice led many consumers to waste time and potentially harm their credit scores.
- False Promises: Misleading “pre-approved” claims.
- Consumer Deception: Time wasted and potential credit score damage.
Ultimately, Credit Karma agreed to cease these misleading claims and settle the matter by compensating the affected customers. As part of the settlement, they committed to paying a total of $3 million. This payout will ensure that those who were misled are compensated, with over $2.5 million being distributed to more than 51,000 customers through checks or PayPal payments.
- Stop Misleading Claims: Agreement to cease false advertising.
- Financial Compensation: $3 million settlement to affected consumers.
- Payout Distribution: Over $2.5 million sent to more than 51,000 customers.
This development underscores the importance of transparency and accountability in financial services, ensuring consumers receive fair treatment and accurate information.
On Thursday, the Federal Trade Commission (FTC) announced a significant development for thousands of consumers. Over $2.5 million will be distributed among 50,994 customers as part of a settlement with Credit Karma.
FTC and Credit Karma Settlement
From February 2018 to April 2021, the FTC discovered that approximately one-third of consumers who pursued “pre-approved” offers from Credit Karma faced disappointment when their applications were ultimately denied. This information came to light through an action announced in September 2022.
The complaint highlighted the impact of Credit Karma’s misleading claims, which led customers to waste valuable time applying for offers. Furthermore, these consumers suffered negative effects on their credit scores due to unnecessary checks and hard inquiries.
Allegations Against Credit Karma
The FTC accused Credit Karma of obscuring disclaimers in the fine print and falsely assuring consumers of having “90% odds” of approval. Moreover, the company was reportedly aware of this deception. Evidence pointed to training materials that allegedly instructed new employees on how to handle the frequent customer complaint of being denied for a “pre-approved” offer.
- Over $2.5 million will be distributed among affected customers.
- The period of the alleged deceptive practices was from February 2018 to April 2021.
- A significant portion of applicants faced denials despite “pre-approval” claims.
- Misleading claims led to unnecessary credit checks, affecting credit scores.
“Credit Karma’s false claims of ‘pre-approval’ cost consumers time and subjected them to unnecessary credit checks,” remarked Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, in a 2022 statement. “The FTC will persist in its efforts to eliminate digital dark patterns that harm consumers and pollute online commerce.”
FTC’s Action Against Credit Karma
As part of a significant agreement with the FTC, Credit Karma was mandated to pay $3 million and prohibited from misleading customers regarding pre-approval or approval odds moving forward. Additionally, the company was required to maintain relevant records to “help prevent further use of deceptive dark patterns.”
Credit Karma’s Response
In a statement to USA TODAY, Credit Karma expressed its position, stating that it “fundamentally disagrees” with the allegations presented in the FTC complaint. They emphasized that these issues “relate solely to statements we ceased making years ago.”
In a recent statement, Credit Karma clarified its role in the credit card application process, emphasizing that any suggestion of them rejecting consumers is simply inaccurate. They stated, “Credit Karma is not a lender and does not make lending decisions.” Additionally, they highlighted that users exploring credit card options through Credit Karma tend to have a significantly higher approval rate compared to the national average.
Credit Karma’s Commitment to Users
Credit Karma expressed its dedication to providing valuable financial tools and services to its members. “We reached this agreement to move forward and concentrate on assisting our members in finding the financial products that suit them best,” the statement concluded.
FTC’s Reimbursement Announcement
The Federal Trade Commission (FTC) has announced a payout of $2.5 million to a total of 50,994 Credit Karma customers. This initiative is for those who submitted a valid claim for reimbursement before the March 4, 2024 deadline.
How can submit a claim to receive payout from the FTC settlement?
Check if you are eligible for a refund. The FTC will provide information on who qualifies based on the specific case and settlement. This may involve using a look-up tool or checking the criteria provided.
If there is a claims process, visit the claims website or contact the settlement administrator to file a claim before the deadline. You may need to provide information or documents to support your claim.
If there is no claims process, the FTC will mail checks or send electronic payments directly to eligible recipients using customer data provided by the company. You do not need to take any action in this case if your contact information is up-to-date.
Cash or deposit any check you receive within 90 days. If you receive an electronic payment like PayPal, accept it within 30 days. Contact the settlement administrator if you have questions.
If you missed funds from the initial distribution, you may receive a payment if the FTC does an additional distribution of remaining settlement funds. These are typically sent automatically to those who cashed their first check.
For more information, visit the settlement website provided by the FTC or contact the settlement administrator. You can also find general answers on the FTC’s refund FAQ page.
Receiving Your Compensation
- Customers who chose to receive their payout via mail will get their payments sent directly to their addresses.
- Those who opted for a digital transfer will receive funds through their PayPal accounts.