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Deadline looms to apply for part of $3M Credit Karma settlement

Credit Karma was accused of deceiving consumers into believing they qualified for credit cards that they were not eligible for.
Credit Karma's settlement document with a "Do Not Qualify" stamp
Posted at 9:05 AM, Mar 03, 2024

Consumers who were declined for a credit card after receiving a pre-approved offer from Credit Karma have until March 4 to claim their part of a $3 million settlement.

"When people see the term pre-approved, they assume that they're going to get that card. Well, that's not always the case," explained Linda Sherry, the Director of National Priorities for the non-profit Consumer Action.

Sherry says, only the company issuing a card has the final say if an applicant qualifies for the card, not third parties like Credit Karma.

"Consumers who applied incurred a hard inquiry on their credit reports, and, if they were denied, may have damaged their credit scores unnecessarily," noted the Federal Trade Commission in their announcement of the claims process.

The agency alleges the personal finance company deceived nearly 500,000 consumers into believing they were "pre-approved" for a credit card or had "90% odds" of approval, but in many cases, the consumers didn't qualify.

Most of the affected consumers have been notified by email. If they did not have an email address on file, the agency says they've received notice in the mail.

Credit Karma paid $3 million to settle the charges, which the FTC will use to pay claims to consumers hurt by the company's actions. Eligible consumers can file a claim online by clicking here.

For consumers who need help filing a claim or have questions, they can email or call 866-848-0871. The deadline to file a claim is March 4, 2024.

When the FTC filed the initial complaint, Credit Karma released a statement writing in part, 'they fundamentally disagree with the FTC allegations', adding those pre-approval 'marketing terms aren't even in use anymore'. Read their full statement here.

When it comes to prescreened offers, you do have a say. If you're getting bombarded with emails, texts, and offers saying you've been pre-screened and qualify for an offer, you can opt-out. Find the details to opt-out here.

This story was originally published by Kristen Johnson at Scripps News Phoenix.