Credit Karma Hurt People’s Credit Scores Using Dark Patterns, FTC Alleges

Credit Karma Hurt People’s Credit Scores Using Dark Patterns, FTC Alleges

The Federal Trade Commission has accused companies of tricking users into signing up for credit cards with so-called dark patterns.

Credit Karma, which offers people a free way to check their credit score, told people they had "90% odds" and were "pre-approved" for credit cards they weren't actually eligible to receive. says the Federal Trade Commission, in a new complaint. Federal agencies have called for rigorous scrutiny of credit reports because between February 2018 and April 2021, nearly one-third of those said to be eligible failed to qualify. claiming that it was "unnecessarily" received and often hurt scores.

The FTC is demanding that personal finance companies pay $3 million to people they allegedly defrauded, and not misrepresent people that they have pre-approved credit cards.

"Credit Karma's false 'pre-authorization' claims have led to consumers wasting time and undergoing unnecessary credit checks," said Samuel Levine, director of the agency's Consumer Protection Division. said in a statement. “FTC continues to crack down on digital dark patterns that harm consumers and pollute online commerce.”

Dark patterns are user interfaces that deceive users in non-intuitive ways. According to the complaint, Credit Karma ran his A/B testing experiment and found that people were more likely to click on ads that said they were pre-approved than those that said the odds of approval were "very high." I found it to be highly The FTC said it constitutes a dark pattern.

Credit Karma said in a statement Thursday that it has changed its business to not tell people it is pre-approved as of April 2021.

“While we fundamentally disagree with the FTC's assertions about marketing terms that are no longer in use, we are ultimately determined to avoid disrupting our mission and help our members find the financial products that are right for them. “We have reached this agreement to continue our focus on doing what we do best,” said Susannah Wright, Chief Legal Officer of Credit Karma, in a statement.

Credit Karma allows you to monitor your credits online without affecting your score. One way to generate revenue is by using the data you receive to enable credit card companies and others to send targeted advertisements to people through the Site. Third-party companies pay credit karma when someone buys a product.

“We will propose offers based on your credit, approval odds, and money earned from our partners,” the company says on its website. In another area, the company details: The lender who funds your loan.

According to the complaint, Credit Karma knew people were being denied after the company said it was pre-approved. As proof, the FTC cited customer service training materials and one of the common problems people complained about was "rejected pre-approved credit card offers."

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