Credit Karma Agrees To $3 Million Settlement Over Deceptive “Pre-Approved” Credit Card Offers
It isn’t just your imagination that a big part of your debt problem is not due to lack of discipline over your spending or to you not working hard enough but to policies that make it difficult for all except the wealthiest of working people to access affordable financial products. You might be doing everything right and paying all your bills on time, but your credit score does not seem to increase, leaving the most desirable loans out of reach. Even worse, your credit score gets lower when you apply for a loan or credit card but the lender does not approve it. Therefore, borrowers carefully consider their chances of getting approved before they apply for credit or loans. The financial products website Credit Karma has just agreed to pay a $3 million settlement after the Federal Trade Commission (FTC) ordered it to stop using certain advertising practices it considered deceptive. If your credit score got lower after a lender misled you into believing that you qualified for a credit card or loan, contact a Boca Raton credit repair lawyer.
Worse Than Giving Consumers False Hope
Credit Karma is not a lender. Rather, it is a website where lenders, such as banks and credit card companies, can offer loans and other financial products to consumers. Credit Karma does not make money off of applications that do not receive approval; it only gets paid once a lender lends money to a consumer or opens a credit card account.
The FTC received numerous complaints where consumers alleged that credit card companies denied their applications after they responded to advertisements posted on Credit Karma between 2018 and 2021 that stated that the consumers were pre-approved or that, if they applied, they had a 90 percent chance of approval. When they applied, they found out that they did not qualify for the offer, so the credit card companies denied their applications. The credit reporting bureaus reported these applications as hard inquiries; if a consumer makes a hard inquiry and gets a rejection, this negatively affects the consumer’s credit score. Therefore, the applicants who responded to the “pre-approved” advertisements on Credit Karma saw their credit scores get lower.
The FTC ordered Credit Karma to stop publishing these deceptive advertisements, which it did. It also ordered Credit Karma to reimburse consumers who had suffered financial losses due to their credit scores getting lower when they applied for credit cards for which they had been misled to believe that they qualified. FTC and Credit Karma agreed to a $3 million settlement to be distributed among borrowers who had been deceived to believe that they would be approved for the credit cards. The News4Jax website did not specify how many consumers will receive a share of the money.
Contact a South Florida Debt Lawyer About Rebuilding Your Credit After Falling for a Deceptive Offer
A South Florida debt lawyer can help you recover your creditworthiness if false advertising has made your debt problems worse. Contact Nowack & Olson, PLLC in Jupiter, Florida to discuss your case.