Nearly one-third of users who applied for credit cards labeled as preapproved by Credit Karma, a credit monitoring company, were subsequently denied following a credit check. According to a complaint filed by the FTC, the marketing efforts wasted consumers’ time and had a negative impact on their credit scores.
FICO Is About To Change Credit Scores. Here’s Why It Matters
FICO is about to change credit scores. Here’s why it matters
Marketing campaigns designed to trick people into taking specific actions, like applying for a credit card an individual is allegedly preapproved for, are known as dark patterns. According to a news release, the FTC is cracking down on predatory practices that “harm consumers and pollute online commerce.”
The FTC complaint alleges that at least between February 2018 and April 2021, Credit Karma violated the Federal Trade Commission Act by promoting products that consumers were either “Pre-Approved” for or had “90% odds” of approval for, but ultimately were unqualified.
“Credit Karma’s false claims of ‘pre-approval’ cost consumers time and subjected them to unnecessary credit checks,” Director of the FTC’s Bureau of Consumer Protection Samuel Levine said in the news release.