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Credit Karma fined $3M by FTC for misleading consumers with credit card offers

thefintechtimes.com

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Re: Credit Karma fined $3M by FTC for misleading consumers with credit card offers

#11

Post by charles_kaw »

hackernewds wrote: post #9
charles_kaw wrote: post #7

>The FTC alleges that the company used claims that consumers were pre-approved and had ’90 per cent odds’ to entice them to apply for offers that, in many instances, they ultimately did not qualify for. I believe CK has inside views to the models^ these companies use, and I wouldn't be surprised to find that 90% is actually very close to reality. However, I can also see why someone taking a hard credit pull would be…

> CK has inside views to the models these companies use, and wouldn't be surprised to find that 90% is actualy very close to reality. or the basis as is obvious is that this was a fraudulent claim. these things get researched thoroughly before they levied

I read it more as "using uncertainty" is a dark pattern and to stop it even if it's accurate. 10% of users a company with that many is a pretty significant impact to people.

I reread the article again, and it seems to me it was "pre-approved" that was the issue.

Regardless, it's good the behavior was noticed and stopped.

Re: Credit Karma fined $3M by FTC for misleading consumers with credit card offers

#13

Post by [deleted] »

charles_kaw wrote: post #7

>The FTC alleges that the company used claims that consumers were pre-approved and had ’90 per cent odds’ to entice them to apply for offers that, in many instances, they ultimately did not qualify for. I believe CK has inside views to the models^ these companies use, and I wouldn't be surprised to find that 90% is actually very close to reality. However, I can also see why someone taking a hard credit pull would be…

[deleted]

Re: Credit Karma fined $3M by FTC for misleading consumers with credit card offers

#15

Post by gruez »

charles_kaw wrote: post #7

>The FTC alleges that the company used claims that consumers were pre-approved and had ’90 per cent odds’ to entice them to apply for offers that, in many instances, they ultimately did not qualify for. I believe CK has inside views to the models^ these companies use, and I wouldn't be surprised to find that 90% is actually very close to reality. However, I can also see why someone taking a hard credit pull would be…

>I wouldn't be surprised to find that 90% is actually very close to reality

The FTC press release[1] says "for many offers, almost a third of consumers who applied were in fact denied". That's quite a ways off from 90%.

[1] https://www.ftc.gov/news-events/news/press-releases/2022/09/...

edit:

>Also, Credit Karma gets paid for successful conversions, and maybe ad placement? It doesn't seem like misleading someone got them any profit.

This is incorrect because misleading causes more people to apply. The people who are coaxed into applying through deception have a non-zero chance of turning into a successful conversion, which makes credit karma money. For instance, if people interested in a credit card, but they're not certain that they'll get approved, so they end up not applying. If there are 100 visitors in that situation, and credit karma lied to them, then they should expect to get 66% (based on the actual approval figures from the FTC) successful conversions (ie. profit).

Re: Credit Karma fined $3M by FTC for misleading consumers with credit card offers

#16

Post by jsjohnst »

mod wrote: post #4
Bud wrote: post #3

All the offers Credit Karma has presented to me have been legit, near as I can tell. I have had no complaints about their app and it has helped me to vastly improve my credit rating. I'm surprised to see this story.

I think they've grown, but it was a one-man company for a long time. Edit: I don't know what I'm talking about, seems like. It's always been great, so I'm also surprised. Glad he can afford it.

> I think they've grown, but it was a one-man company for a long time.

Say what? From day one it wasn’t a one-man company, they had multiple founders from the beginning.

Re: Credit Karma fined $3M by FTC for misleading consumers with credit card offers

#17

Post by JumpCrisscross »

charles_kaw wrote: post #7

>The FTC alleges that the company used claims that consumers were pre-approved and had ’90 per cent odds’ to entice them to apply for offers that, in many instances, they ultimately did not qualify for. I believe CK has inside views to the models^ these companies use, and I wouldn't be surprised to find that 90% is actually very close to reality. However, I can also see why someone taking a hard credit pull would be…

> wouldn't be surprised to find that 90% is actually very close to reality

I’d be blown away if this is the case. Credit models are carefully guarded. They’re also expensive to run. If Credit Karma could approximate the pricey model with open-source data, they’d have been bought by a bank, not a tax company.

Re: Credit Karma fined $3M by FTC for misleading consumers with credit card offers

#18

Post by refurb »

RileyJames wrote: post #2

>> Preserve records: To help prevent further use of deceptive dark patterns, the order requires Credit Karma to preserve records of any market, behavioral, or psychological research, or user, customer, or usability testing, including any A/B or multivariate testing, copy testing, surveys, focus groups, interviews, clickstream analysis, eye or mouse tracking studies, heat maps, or session replays or recordings. That’s…

I worked in an industry where we were required to use a bunch of euphemisms throughout our internal documents for just this reason - if we were investigated by the government, all of those documents would be evidence and using words like “war room” would be used as proof of (channeling the DOJ press release team) “anti-competitive actions akin to a war where the enemy would be destroyed, and the defendant would have a monopoly”.

So instead we used “team room”. The work never changed, just what we called it.

Re: Credit Karma fined $3M by FTC for misleading consumers with credit card offers

#20

Post by drc500free »

RileyJames wrote: post #2

>> Preserve records: To help prevent further use of deceptive dark patterns, the order requires Credit Karma to preserve records of any market, behavioral, or psychological research, or user, customer, or usability testing, including any A/B or multivariate testing, copy testing, surveys, focus groups, interviews, clickstream analysis, eye or mouse tracking studies, heat maps, or session replays or recordings. That’s…

That is VERY interesting. Complying with this is probably a bigger headache than the fine.
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