According to the FTC (Federal Trade Commission), from February 2018 to April 2021, Credit Karma showed many users credit card offers labeled Pre-Approved even though they did not actually meet the pre-approval criteria. This led to many denied applications and caused harm, such as wasting a hard pull (HP) and affecting credit scores.
The FTC ordered CK to stop this behavior, pay $3,000,000 in compensation, and preserve all prior records.
Stop deceiving consumers: The FTC’s order prohibits Credit Karma from deceiving consumers about whether they are approved or pre-approved for a credit offer, as well as about the odds or likelihood that a consumer will be approved for a credit offer.Pay $3 million in consumer redress: The order requires Credit Karma to pay $3 million to the FTC, which will be sent to consumers who were harmed by the company’s actions.
Preserve records: To help prevent further use of deceptive dark patterns, the order requires Credit Karma to preserve records of any market, behavioral, or psychological research, or user, customer, or usability testing, including any A/B or multivariate testing, copy testing, surveys, focus groups, interviews, clickstream analysis, eye or mouse tracking studies, heat maps, or session replays or recordings.
Personally, I think these pre-approval offers are best taken with a grain of salt, especially when they are shown by third parties. In the internet era, using big data to match users with credit cards is very common, and aggressive advertising is everywhere, so it can be hard to draw the line on what is excessive. That said, offers shown directly by banks tend to be more reliable, and the approval odds are often fairly high. If you were denied after applying through CK, you may receive some compensation.
