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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

#21

Post by ericcholis »

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…

Unless they worked out a deal for impressions and not conversions. Handwaving the 90% behind some asterisk.

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

#23

Post by spoils19 »

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 doubt it - CK is funded and the FTC is underfunded. Trusting the government over private in this scenario could be perilous.

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

#24

Post by charles_kaw »

JumpCrisscross wrote: post #17
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.

Credit Karma has a platform for running models against their dataset, and appears to buy everyone's daily data from Equifax.

Also, Intuit is much more than a tax company now.

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

#25

Post by polygamous_bat »

gruez wrote: post #15
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…

I wonder if there is some selection bias going on. One hypothesis could be that the people who are financially more responsible (and thus are more likely to be approved for a new credit card) are also the people who are unlikely to apply for a new credit card just after seeing an ad in a website. Thus, credit karma ad clickers self-select to a lower success rate than what their model predicted.

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

#27

Post by ipsum2 »

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…

Doesn't this conflict with California Consumer Privacy Act?

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

#28

Post by ajhurliman »

gruez wrote: post #15
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…

If a third of consumers _should_ have been denied because they were not credit-worthy, then there were no errors. You need to look at the false negative rate, not the absolute number of people denied for financial products.

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

#29

Post by simonh »

spoils19 wrote: post #23
hackernewds wrote: post #9

Earlier quoted context omitted.

> 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 doubt it - CK is funded and the FTC is underfunded. Trusting the government over private in this scenario could be perilous.

And yet it turns out the proportion of applicants not qualified was more more than 3 times higher than CK claimed, and their assertions that applicants were pre-approved turned out to be a flat out lie.

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

#30

Post by spullara »

polygamous_bat wrote: post #25
gruez wrote: post #15

Earlier quoted context omitted.

>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…

I wonder if there is some selection bias going on. One hypothesis could be that the people who are financially more responsible (and thus are more likely to be approved for a new credit card) are also the people who are unlikely to apply for a new credit card just after seeing an ad in a website. Thus, credit karma ad clickers self-select to a lower success rate than what their model predicted.

I'm honestly surprised more weren't denied given that folks that have no credit for good reason would be the most likely to apply for credit.
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