Are you one of the nearly half a million people offered a pre-approved credit card from Credit Karma but were then denied after applying?
If so, you may be due money as part of the company's $3 million settlement with the government — but you need to act fast as the deadline to file a claim is March 4.
As Kiplinger previously reported, nearly half a million people who were offered a pre-approved credit card from Credit Karma only to be denied after applying could be entitled to a portion of the company’s settlement with the government, according to the Federal Trade Commission (FTC). The agency charges that Credit Karma's alleged actions 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.
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The FTC sent letters and email with Claim IDs to people eligible to apply. However, if you did not receive one and believe you should have, you can call the claims administrator at 1-866-848-0871.
The action comes as the overall banking and financial services sectors face government scrutiny over concerns including making false or misleading claims, and as the country's credit card debt hit a record $1 trillion.
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 said, adding that the company helps its more than 130 million members understand their finances including the likelihood of financial product approvals.
"We have a track record of positive outcomes, and members shopping for credit cards on Credit Karma have a significantly higher approval rate than the national average," the company spokesperson said. "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.”
Offers to those who did not qualify
The settlement stems from a September 2022 FTC investigation into Credit Karma's alleged use of claims that people were pre-approved and had "90% odds" of approval. The claims were made in an effort to entice people to apply for offers that in many cases they did not qualify for, the FTC said.
To use Credit Karma's services such as credit score monitoring, people must provide personal information, including credit and income information, which the company used to send targeted ads and recommendations for financial products such as credit cards, the FTC said.
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.
Where to apply for a payment
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@creditkarmasettlement.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 yet set a date for mailing payments but said it will update this page when more information is available.
The deadline for filing a claim is March 4, 2024.
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FAQs
You may be eligible for a payment. The FTC is sending notices to 497,425 people who may be eligible for a payment if they were denied credit after responding to an offer from Credit Karma that said they were “pre-approved” or had a “90% odds” of approval.
Why is Credit Karma in trouble? ›
The Federal Trade Commission says Credit Karma misled applicants and may have lowered their credit scores. The Federal Trade Commission has started the compensation process in a $3 million settlement with Credit Karma, which the agency alleges deceived customers about being approved for credit cards.
Is Credit Karma reaching a settlement with the FTC in a case against the company? ›
The settlement stems from a September 2022 FTC investigation into Credit Karma's alleged use of claims that people were pre-approved and had "90% odds" of approval. The claims were made in an effort to entice people to apply for offers that in many cases they did not qualify for, the FTC said.
Why did Credit Karma give me money? ›
A Karma Guarantee that you see on a credit card offer on Credit Karma means that if you are declined by the applicable lending partner for that credit card, you can receive a payment from Credit Karma (“Cards Karma Guarantee”). It is not a guarantee of approval for any credit card offer.
How to find out if Credit Karma owes you money? ›
If you go to Credit Karma Unclaimed Money, we'll automatically point you in the right direction. Credit Karma will direct you to the applicable state's treasury or state controller's website, which is where you typically start the claims process to get your unclaimed money back.
Can I get money from Credit Karma? ›
If you're interested in withdrawing funds from your Credit Karma MoneyTM Save* account and sending them to your external linked bank account, you may do so through the following steps: Access your Credit Karma Money Save account. Select Withdraw. Enter the desired amount under Withdrawal amount.
Why is Credit Karma always wrong? ›
Not all lenders report to all three major credit bureaus
Some lenders may only report to one or two bureaus, not all three. Also, the bureaus may not update your reports at the same time. Different information can understandably result in different credit reports and credit scores.
How much is the FTC refund check? ›
In addition, the FTC sometimes imposes a minimum check amount that excludes some consumers who otherwise would have been eligible. In general, the FTC does not mail checks of less than $10. In 2022, the FTC sent additional payments totaling more than $193 million dollars to consumers in 26 different FTC cases.
Is Credit Karma offering a $3 million settlement to consumers? ›
The deadline for consumers who were deceived by pre-approved credit card offers by Credit Karma to sign up to get their part of a $3 million settlement with federal regulators is almost here. The deadline to file your claim is March 4.
Why shouldn't you dispute on Credit Karma? ›
If you dispute your credit reports online, you make it difficult to enforce the law, and it slows you down. Eventually, if you are correct, it will require filing a claim to make the credit bureaus correct the problem, especially if it was not fixed the first time.
As someone with a 650 credit score, you are firmly in the “fair” territory of credit. You can usually qualify for financial products like a mortgage or car loan, but you will likely pay higher interest rates than someone with a better credit score. The "good" credit range starts at 690.
What is a good credit score to buy a house? ›
You'll typically need a credit score of 620 to finance a home purchase. However, some lenders may offer mortgage loans to borrowers with scores as low as 500. Whether you qualify for a specific loan type also depends on personal factors like your debt-to-income ratio (DTI), loan-to-value ratio (LTV) and income.
How much are people getting from the Credit Karma settlement? ›
How much money will I get? That depends on how many people file claims, according to the FTC. However, if the total number of people estimated to be eligible were to file claims, that would result in payments of about $6 each.
How long does it take Credit Karma to release funds? ›
Funds transferred into your Credit Karma Money accounts are not available for immediate withdrawal. The process typically takes 1-3 days. This additional time aims to prevent returned transfers and overdrafts on your external bank account.
Does Credit Karma owe me money? ›
If you think you should be eligible but haven't seen a notice from the FTC, you can email info@CreditKarmaSettlement.com or call (866) 848-0871. The FTC says that the $3 million will go to reimbursing Credit Karma users, but the final payment amount will be calculated based on the total number of eligible applicants.
How do I get my money back from Credit Karma? ›
Transfer to another account
- Go to the Money tab in the Credit Karma app.
- Tap Spend account.
- Tap Transfer.
- Select Withdraw.
- Enter the amount you'd like to transfer.
- Select the account you want to transfer From and the account you want to transfer To.
- Confirm Withdraw amount.
- Confirm the transaction details, then tap Confirm.
Applying for a personal loan. You can search for loan offers with your Intuit Credit Karma account and sort by annual percentage rate, loan amount or monthly payment. Credit Karma shows you offers from lenders we partner with, but we are not a lender.
