Consumers can begin filing for share of Credit Karma settlement
Q: Can you explain the Credit Karma settlement and who is entitled to restitution?
A:
Credit Karma reached a $3 million settlement with the Federal Trade Commission, which claimed that the company offered a preapproved credit card to nearly a half-million consumers and then denied their applications.
The FTC says the move caused people to waste time on applying and, in some cases, even caused them to wind up with a lowered credit score once they were denied.
Credit Karma has already emailed notices to 497,425 people and mailed an additional 4,000 who do not have an email on file with instructions on how to file a claim.
Credit Karma fundamentally disagrees with the allegations that relate “solely to statements we ceased making years ago,” a company spokesperson told Kiplinger in an emailed statement. “Any implication that Credit Karma rejected consumers applying for credit cards is simply incorrect, as Credit Karma is not a lender and does not make lending decisions.”
The spokesperson added that the company helps its members understand their finances, including the likelihood of financial product approvals.
“We reached this agreement to put the matter behind us so we can maintain our focus on helping our members find the financial products that are right for them,” the spokesperson said.
The Credit Karma settlement stems from a September 2022 FTC investigation into the company’s alleged use of claims that people were preapproved and had “90% odds” of approval. The agency alleges that, from February 2018 to April 2021, the company deceived consumers about whether they were approved and that nearly one-third of those who applied were denied credit offers.
When consumers applied for these offers, third-party companies made a “hard inquiry” on their credit reports, which in many instances lowered consumers’ credit scores and harmed their ability to secure other financial products in the future, the FTC said.
If you receive an email or letter with a claim number, you can apply for a payment online. If you have questions or are seeking assistance, write to info@creditkarma settlement.com or call 866-848-0871.
The amount of the payment will be determined by a number of factors, including how many people choose to file, the agency said. The FTC has not set a date for mailing payments but said it provide an update when more information is available. The deadline for filing a claim is March 4.