January 27, 2023

FTC Finalizes Consent Order with Credit Karma over Deceptive “Pre-Approval” Claims

Lori Kalani, Bernard Nash

Cozen O'Connor

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Cozen O'Connor

The FTC finalized a consent order with credit services company Credit Karma, LLC to resolve allegations that the company violated the FTC Act by misrepresenting to consumers that they have been “pre-approved” for third-party financial products when they had not.
According to the complaint, Credit Karma utilized its website, mobile app, and email marketing campaigns to represent to consumers that they had been pre-approved for credit cards and it sent consumers links to apply for the offers. However, financial product companies had not preapproved the consumers, and almost a third of consumers who applied for the offers that Credit Karma sent them were denied the offers. In many instances, the hard inquiries on consumers’ credit reports from the offer applications lowered the credit scores of consumers whose applications were denied.
Under the terms of the consent order, Credit Karma must pay $3 million to consumers who allegedly wasted time and potentially lowered their credit scores by applying for the offers.

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