In the Matter of Credit Karma
Case summary
Credit Karma was fined for using false "pre-approved" claims, to entice consumers into applying for credit card offers they often did not qualify for.
Our analysis
Preselection is supportable as an analytical classification of the defaults expressly documented by the Bundeskartellamt.
Outcome
Credit Karma is ordered to cease making misleading or unsubstantiated claims about approval, including pre-approval, and consumers' likelihood of approval. The company is also mandated to pay $3 million in monetary relief to consumers who applied for the offers mentioned in the complaint. Additionally, to deter future deceptive practices, Credit Karma must retain records of market research, behavioral studies, psychological research, user testing, customer feedback, and usability testing, including any A/B testing.
Parties
Federal Trade Commission and Credit Karma, LLC