FTC Finalizes Consent Order Requiring Credit Karma to Pay $3M

The Federal Trade Commission (FTC) has finalized a consent order regarding Credit Karma.

The FTC’s complaint, which was announced in September, charged the credit service company with making deceptive claims that consumers were “pre-approved” for credit card offers. The complaint said that in some cases, the consumers were not qualified and therefore wasted the time they spent applying for credit cards, PYMNTS reported at the time.

Following a public comment period, the FTC voted 4-0 to approve the final order that requires the company to pay $3 million and stop making such claims, according to a Monday (Jan. 23) press release.

The FTC also said in the release that Credit Karma deployed “dark patterns” to misrepresent the “pre-approved” offers.

Dark patterns are design elements used in web-based commerce to manipulate consumers. These include design elements that cause false beliefs, hide key information, lead to unauthorized charges or trick customers into sharing personal data, the FTC said in a September press release.

Reached for comment, a Credit Karma spokesperson told PYMNTS via email: “We fundamentally disagree with the allegations the FTC makes in their complaint. We do not engage in so-called ‘dark patterns,’ there is no mention of this at all in our agreement with the FTC, and their suggestion is entirely baseless. There are also no allegations that members paid unexpected fees or charges of any kind. We reached this agreement with the agency simply to be able to maintain our focus on helping our members find the financial products that are right for them.”

The FTC’s press release comes days after the Consumer Financial Protection Bureau (CFPB) cautioned subscription companies that they must not use digital dark patterns and other means to trick people into paying for subscriptions that they don’t want.

In a Thursday (Jan. 19) press release, the CFPB said that in the case of subscription businesses, digital dark patterns include tricks built into websites to hide information, to make it difficult to cancel subscriptions or to get consumers to click on links and make purchases inadvertently.

“Deceptive practices that seek to trap consumers into subscriptions they don’t want are a violation of the law,” Samuel Levine, director of the FTC Bureau of Consumer Protection, said at the time. “Today’s circular puts companies on notice that there is a government-wide effort to stop these manipulations.”