The Federal Trade Commission (FTC) has fined Credit Karma $3m for ‘tricking’ Americans with supposedly false ‘pre-approved’ credit offers.
The FTC said Credit Karma misrepresented that consumers were pre-approved for credit card offers, enticing them to apply for those offers that they often ultimately didn’t qualify for.
FTC said Credit’s actions saw users face a tough inquiry on their credit reports, and if they were denied led to potentially damaging their credit scores. The company said it knew its purported ‘pre-approvals’ conveyed false ‘certainty’ to consumers, according to the complaint.
Based on the results of experiments – known as A/B testing – Credit knew that consumers were more likely to click on offers saying ‘preapproved’ than those saying they had ‘excellent’ odds of being approved.
Finextra highlighted that the FTC has also ordered Credit Karma to stop deceiving customers and to preserve records to prevent further use of deceptive dark patterns.
FTC Bureau of Consumer Protection director Samuel Levine said, “Credit Karma’s false claims of ‘pre-approval’ cost consumers time and subjected them to unnecessary credit checks. The FTC will continue its crackdown on digital dark patterns that harm consumers and pollute online commerce.”
The FTC previously said it will consider new rules to crack down on commercial surveillance practices that put Americans’ at risk from threat actors.
According to Cyberscoop, these surveillance practices put Americans’ data at risk of falling into the hands of ‘hackers and data thieves’.
FTC chair Lina Khan said, “The growing digitization of our economy—coupled with business models that can incentivize endless hoovering up of sensitive user data and a vast expansion of how this data is used—means that potentially unlawful practices may be prevalent.
“Our goal today is to begin building a robust public record to inform whether the FTC should issue rules to address commercial surveillance and data security practices and what those rules should potentially look like.”
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