More than 51,000 Credit Karma customers will receive more than $2.5 million from the FTC as part of a recent settlement. People who were hurt by the popular credit-monitoring and finance app’s dishonest actions will be happy to hear this update.
The Federal Trade Commission (FTC) took strong action against Credit Karma in 2020. That same year, the company was bought by the financial software giant Intuit. At the heart of the problem were claims that people were misled by false information about credit card pre-approvals.
Credit Karma to Pay $3 Million for Misleading Claims
The FTC found that Credit Karma lied to customers by telling them they were “pre-approved” for certain credit card offers when they weren’t. This dishonest method caused lots of people to waste time and could hurt their credit scores.
- False Promises: Misleading “pre-approved” claims.
- Consumer Deception: Time wasted and potential credit score damage.
In the end, Credit Karma agreed to stop making these false claims and settle the dispute by paying back the customers who were hurt. They agreed to pay a total of $3 million as part of the settlement. The over $2.5 million being sent to more than 51,000 customers through checks or PayPal payments will make sure that those who were lied to get their money back.
- 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 event shows how important it is for financial services to be open and responsible so that customers are treated fairly and get correct information.
On Thursday, the Federal Trade Commission (FTC) told thousands of consumers about a big change. In a settlement with Credit Karma, more than $2.5 million will be given to 50,994 customers.
FTC and Credit Karma Settlement
The FTC found that between February 2018 and April 2021, about one-third of people who tried to get “pre-approved” offers from Credit Karma were let down when their applications were turned down. This information became public after a plan was made public in September 2022.
Credit Karma’s false claims caused customers to waste time applying for offers, which was made clear in the complaint. In addition, these people’s credit scores went down because of hard inquiries and checks that weren’t needed.
Allegations Against Credit Karma
The FTC said that Credit Karma hid disclaimers in small print and lied to customers by saying they had “90% odds” of being approved. It was also said that the company knew about this lie. There was evidence of training materials that supposedly told new employees how to deal with customers who often complained about not being able to get 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.
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, said in a 2022 statement, “Credit Karma’s false claims of ‘pre-approval’ cost consumers time and put them through unnecessary credit checks.” “The FTC will keep working to get rid of digital dark patterns that hurt consumers and make online shopping less safe.”
FTC’s Action Against Credit Karma
As part of a big deal with the FTC, Credit Karma had to pay $3 million and agreed not to lie to customers about their chances of getting pre-approved or approved in the future. The company also had to keep records that were needed to “help prevent further use of deceptive dark patterns.”
Credit Karma’s Response
Credit Karma made its case in a statement to USA TODAY, saying that it “fundamentally disagrees” with the statements made in the FTC complaint. They made it clear that these problems “only have to do with statements we stopped making years ago.”
Credit Karma recently released a statement that made it clear what role it plays in the credit card application process and made it clear that any claims that they turn down customers are simply not true.
“Credit Karma is not a lender and does not make lending decisions,” they said. They also pointed out that Credit Karma users who are looking into credit card options tend to have a much higher approval rate than the national average.
Credit Karma’s Commitment to Users
Credit Karma said it was committed to giving its members useful financial tools and services. It was agreed that the group would move forward and focus on helping its members find the best financial products for them, the statement said.
FTC’s Reimbursement Announcement
The Federal Trade Commission (FTC) said that 50,994 Credit Karma customers would each get $2.5 million. This project is for people who made a valid claim for reimbursement before the deadline of March 4, 2024.
How can submit a claim to receive payout from the FTC settlement?
Check to see if you can get a refund. Based on the case and settlement, the FTC will let people know if they qualify. This could mean using a search engine or making sure the criteria given are met.
Check out the claims website or call the settlement administrator to make a claim before the due date if there is one. You might have to back up your claim with information or papers.
If there is no claims process, the FTC will use customer information given by the company to mail checks or send electronic payments directly to people who are eligible. In this case, you don’t need to do anything if your contact information is correct.
You have 90 days to cash or deposit any check you get. When you get an electronic payment like PayPal, you have 30 days to accept it. If you have questions, you can talk to the settlement administrator.
If you didn’t get money from the first distribution, you might get it if the FTC gives out the rest of the settlement funds again. These are often sent automatically to people whose first check was cashed.
To find out more, go to the FTC’s settlement website or get in touch with the settlement administrator. This page from the FTC has general answers as well.
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.
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