Following a recent settlement, the FTC will distribute over $2.5 million to more than 51,000 Credit Karma clients. This update delivers exciting news to those who have been affected by the popular credit-monitoring and finance app’s deceitful methods.
In 2020, the Federal Trade Commission (FTC) took significant action against Credit Karma, which had been acquired by financial software behemoth Intuit the same year. The main issue was claims of misleading customers with false promises about credit card pre-approvals.
Credit Karma to Pay $3 Million for Misleading Claims
The FTC discovered that Credit Karma falsely misled customers that they were “pre-approved” for specific credit card offers when, in fact, they did not qualify. This fraudulent tactic caused many individuals to lose time and potentially damage their credit ratings.
- False Promises: Misleading “pre-approved” claims.
- Consumer Deception: Time wasted and potential credit score damage.
Finally, Credit Karma agreed to stop making deceptive representations and settle the case by compensating the impacted clients. As part of the settlement, they agreed to pay a total of $3 million. This reimbursement will compensate those who were deceived, with over $2.5 million delivered to more than 51,000 clients via 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 emphasizes the need of transparency and accountability in financial services, ensuring that customers receive fair treatment and accurate information.
On Thursday, the Federal Trade Commission (FTC) announced a significant development affecting thousands of customers. A settlement with Credit Karma will result in the distribution of more than $2.5 million to 50,994 clients.
FTC and Credit Karma Settlement
Between February 2018 and April 2021, the FTC determined that over one-third of consumers who sought “pre-approved” offers from Credit Karma were disappointed when their applications were finally denied. This information became public after an action was announced in September 2022.
The complaint focused on the impact of Credit Karma’s deceptive promises, which caused clients to waste precious time applying for deals. Furthermore, needless investigations and hard queries harmed these clients’ credit ratings.
Allegations Against Credit Karma
The FTC accused Credit Karma of hiding caveats in fine print and fraudulently claiming that consumers had “90% odds” of approval. Furthermore, the corporation was allegedly aware of this fraud. Evidence pointed to training materials that reportedly taught new employees how to address the common customer complaint of being denied 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,” said 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 substantial settlement with the FTC, Credit Karma was ordered to pay $3 million and barred from misrepresenting clients about pre-approval or approval probability in the future. Additionally, the corporation was compelled to keep relevant information to “help prevent further use of deceptive dark patterns.”
Credit Karma’s Response
In a response to USA TODAY, Credit Karma stated that it “fundamentally disagrees” with the charges made in the FTC lawsuit. They stated that these concerns “relate solely to statements we ceased making years ago.”
In a recent statement, Credit Karma defined its involvement in the credit card application process, underlining that any idea that they reject customers is just incorrect. They said: “Credit Karma is not a lender and does not make lending decisions.” They also noted that individuals researching credit card choices through Credit Karma have a considerably higher approval rate than the national average.
Credit Karma’s Commitment to Users
Credit Karma stated its commitment to provide excellent financial tools and services to its users. “We reached this agreement to move forward and concentrate on assisting our members in finding the financial products that suit them best,” according to the statement.
FTC’s Reimbursement Announcement
The FTC has announced a $2.5 million compensation to 50,994 Credit Karma clients. This initiative is for people who submitted a legitimate refund claim by the March 4, 2024 deadline.
How can submit a claim to receive payout from the FTC settlement?
See if you are entitled for a refund. The FTC will determine who qualifies depending on the individual case and settlement. This could include using a look-up tool or reviewing the criteria provided.
If there is a claims process, go to the claims website or contact the settlement administrator to submit a claim before the deadline. To support your claim, you may be required to provide further information or documentation.
If there is no claims process, the FTC will mail checks or send electronic compensation directly to qualified recipients based on customer information provided by the corporation. You do not need to take any action in this scenario if your contact information is current.
Cash or deposit any check you receive within 90 days. Accept electronic payments, such as those sent through PayPal, within 30 days. Please contact the settlement administrator if you have any queries.
If you did not receive funds from the initial distribution, you may be eligible for a payout if the FTC distributes the leftover settlement amounts again. These are usually delivered automatically to customers who have cashed their first cheque.
For further information, please visit the FTC’s settlement website or contact the settlement administrator. You can also get general answers from 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.