Credit Karma fined $3M by FTC for misleading consumers with credit card offers • Hacker News Board

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

#41

Post by systoll » Mon, Sep 05, 2022, 5:04 AM UTC

It’s a weird case IMO — CreditKarma played a role but it seems like all the actual harm was elsewhere.

1. The Criteria are given by the banks via 'Lightbox'. If they were misrepresenting those criteria, it seems like the harm was to the banks, but this isn't mentioned. And if they couldn’t express their criteria via lightbox and used it anyway… again it seems like that’s mostly on the banks.

2. I suspect these estimates were better than nothing, which is basically what bank websites usually give you before you apply.

3. CreditKarma isn’t making the applications. The lenders are the ones forcing a 'hard pull' before telling you if the loan is available to you.

4. The credit score companies are the ones that decided that the 'hard pulls' would reduce people’s credit score for a significant period. Why is this only a problem if they used CreditKarma?

5. The new lender is the one rejecting loan applications based on credit score changes caused by the client shopping around. Why is this only a problem if they used CreditKarma?

**

It seems like there’s a need for a 'credit lock' that absolutely tanks your credit score while you are being checked, to avoid people applying for multiple lines of credit simultaneously.

Having lasting impacts beyond that seems anti-consumer, since it means you’re penalised for shopping around.

CreditKarma was an imperfect band-aid over that, but penalising them for that seems like treating the symptoms and not the cause.

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

#42

Post by kodah » Mon, Sep 05, 2022, 5:12 AM UTC

distantaidenn wrote: post #39

JumpCrisscross wrote: post #36

Earlier quoted context omitted.

> Nothing, nada, zilch. All I can do now is get a secured card and hold on to that for some time -- which is what I have been doing for about a year so far I started with a blank credit folio late in life. This was not my experience. It may make sense for you to speak to your bank or to a financial advisor.

I'm afraid a lot _might_ have to do with my registered address (zip code) in the States, when I try to apply. Inner city and all that. Edit: The rejection note that I normally receive is: insufficient credit history. To me it's a catch-22 situation. It always boggles my mind when I see 20 somethings with 10s of thousands of dollars in credit card and loan debt, while I can't even get in the door. Not saying I plan on…

I defaulted on debt and was in the military for a few years after 2008. I challenged my debt and won. When I started fresh I had a 500 credit score (which sounds like what you have). What I learned is that credit offers come to one of two kinds of people: people with really good credit and people with moderately shitty credit. If you have no credit then there's no offer for you. The best way I found to improve my credit was to pay bills. Things like a cellphone, rent, utilities, etc all get reported to credit bureaus.

My working theory is that this case exists because they have no data to calculate and classify risk on you with.

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

#43

Post by cmeacham98 » Mon, Sep 05, 2022, 5:14 AM UTC

distantaidenn wrote: post #39

JumpCrisscross wrote: post #36

Earlier quoted context omitted.

> Nothing, nada, zilch. All I can do now is get a secured card and hold on to that for some time -- which is what I have been doing for about a year so far I started with a blank credit folio late in life. This was not my experience. It may make sense for you to speak to your bank or to a financial advisor.

I'm afraid a lot _might_ have to do with my registered address (zip code) in the States, when I try to apply. Inner city and all that. Edit: The rejection note that I normally receive is: insufficient credit history. To me it's a catch-22 situation. It always boggles my mind when I see 20 somethings with 10s of thousands of dollars in credit card and loan debt, while I can't even get in the door. Not saying I plan on…

You've had a secured card for over a year and still receive "insufficient credit history" denials, even for basic unsecured cards?

Have you ever defaulted on a debt or something similarly bad? If you haven't, have you checked your credit reports (from all 3) to make sure there isn't false/fraudulent info on there?

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

#44

Post by SilasX » Mon, Sep 05, 2022, 5:31 AM UTC

kodah wrote: post #42

distantaidenn wrote: post #39

Earlier quoted context omitted.

I'm afraid a lot _might_ have to do with my registered address (zip code) in the States, when I try to apply. Inner city and all that. Edit: The rejection note that I normally receive is: insufficient credit history. To me it's a catch-22 situation. It always boggles my mind when I see 20 somethings with 10s of thousands of dollars in credit card and loan debt, while I can't even get in the door. Not saying I plan on…

I defaulted on debt and was in the military for a few years after 2008. I challenged my debt and won. When I started fresh I had a 500 credit score (which sounds like what you have). What I learned is that credit offers come to one of two kinds of people: people with really good credit and people with moderately shitty credit. If you have no credit then there's no offer for you. The best way I found to improve my cre…

> When I started fresh I had a 500 credit score (which sounds like what you have).

No, when your credit history is non-existent, the free credit score sites will happily tell you it’s much higher than that (mine was reported as 720-740 when I lacked history), but you’ll still get auto-rejected for everything.

Interestingly, I emailed Arnold Kling, an economist writing about the subprime market at the time (2007) and he refused to believe that was happening, and insisted I must have some horrible default on my record. (I didn’t.)

A 500 credit score from a default is much better than having no history.

(I’m not the OP but was in a similar situation.)

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

#45

Post by SilasX » Mon, Sep 05, 2022, 5:37 AM UTC

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.

But CK isn’t predicting whether you will default, but whether another lender will regard you as a good customer (where default risk is just one factor).

That’s a different problem than simply evaluating credit risk, and is much less researched — so not the same as the highly guarded credit models.

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

#46

Post by [deleted] » Mon, Sep 05, 2022, 5:55 AM UTC

JumpCrisscross wrote: post #40

distantaidenn wrote: post #39

Earlier quoted context omitted.

I'm afraid a lot _might_ have to do with my registered address (zip code) in the States, when I try to apply. Inner city and all that. Edit: The rejection note that I normally receive is: insufficient credit history. To me it's a catch-22 situation. It always boggles my mind when I see 20 somethings with 10s of thousands of dollars in credit card and loan debt, while I can't even get in the door. Not saying I plan on…

> my registered address (zip code) in the States Are you applying from outside America? Playing devil’s advocate, a college friend skipped paying a bunch of loans by emigrating outside the reach of collectors. It informs why creditors are wary about lending to international clients with whom they have no prior relationship. Hence the advice to work through your bank and financial advisor; they know you, and that rela…

[deleted]

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

#47

Post by distantaidenn » Mon, Sep 05, 2022, 6:12 AM UTC

cmeacham98 wrote: post #43

distantaidenn wrote: post #39

Earlier quoted context omitted.

I'm afraid a lot _might_ have to do with my registered address (zip code) in the States, when I try to apply. Inner city and all that. Edit: The rejection note that I normally receive is: insufficient credit history. To me it's a catch-22 situation. It always boggles my mind when I see 20 somethings with 10s of thousands of dollars in credit card and loan debt, while I can't even get in the door. Not saying I plan on…

You've had a secured card for over a year and still receive "insufficient credit history" denials, even for basic unsecured cards? Have you ever defaulted on a debt or something similarly bad? If you haven't, have you checked your credit reports (from all 3) to make sure there isn't false/fraudulent info on there?

That's how my journey started. I wanted to take advantage of my frequent flights (pre-pandemic), and applied for a card with travel benefits, only to be declined.

I decided to check my credit report, and noticed a default from like 5 years ago that had been sent to collections -- it was a paltry sum. Some years ago, I was in the US for a couple months for work, and got a monthly phone contract with a large mobile provider and paid for my device upfront. I EXPLICITLY chose electronic billing ONLY for the service, as I was based out of a hotel during the time.

So, when it was time to return to my country of residence, I went to the shop where I got the phone and service, and closed the account. All was well.

Fast forward 5 years, and it seems that the mobile provider had actually sent (via snail mail) a final bill to my hotel address. They didn't mention this to me when I closed the account IN PERSON. I had no idea this last bill even existed till I checked my credit report. So, since I had no other credit history -- this was the single line item on my credit report from all 3 reporting agencies.

I called the provider, pulled up my old contract (good thing I never delete emails), and proved to them that I had signed up for electronic bills only, thus they were in err. I paid the last bill, and they expunged it from my credit report. This all happened over a year ago. That negative item is no longer listed with any of the big 3.

So I don't know if this line item is still there but unlisted (I've checked my reports from all 3 in detail), and was told by them as well that the record is 100% gone, yet I still can't make any headway in loans or credit cards. The _only_ thing that makes sense is that I'm being flagged due to my physical address in the US -- high-crime, low-income inner city neighborhood.

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

#48

Post by ralph84 » Mon, Sep 05, 2022, 6:13 AM UTC

distantaidenn wrote: post #33

I have zero debt. Absolutely zero. However, I left the States soon after graduating university, and thus also have (had) no credit history there. Since I've been planning to return soon, I've been trying to build a history, so when the time comes, I can get a mortgage loan. The process of building a credit history has been enlightening and frustrating. I'm in the tech world, as most people in this forum is as well. I…

Is there someone who lives in the US who can co-sign with you? It shouldn't be surprising that people who don't live in the US have trouble getting unsecured credit in the US. Creditors want to at least have the option of suing if there's a default. Suing someone who doesn't live in the country is a lot more complicated.

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

#49

Post by distantaidenn » Mon, Sep 05, 2022, 6:15 AM UTC

ralph84 wrote: post #48

distantaidenn wrote: post #33

I have zero debt. Absolutely zero. However, I left the States soon after graduating university, and thus also have (had) no credit history there. Since I've been planning to return soon, I've been trying to build a history, so when the time comes, I can get a mortgage loan. The process of building a credit history has been enlightening and frustrating. I'm in the tech world, as most people in this forum is as well. I…

Is there someone who lives in the US who can co-sign with you? It shouldn't be surprising that people who don't live in the US have trouble getting unsecured credit in the US. Creditors want to at least have the option of suing if there's a default. Suing someone who doesn't live in the country is a lot more complicated.

I'm American and 90% of my banking/bill payment is done on the US side. I still get plenty of snail mail to my US address, as well. I don't think the credit reporting agencies are aware of my physical location.

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

#50

Post by distantaidenn » Mon, Sep 05, 2022, 6:21 AM UTC

SilasX wrote: post #44

kodah wrote: post #42

Earlier quoted context omitted.

I defaulted on debt and was in the military for a few years after 2008. I challenged my debt and won. When I started fresh I had a 500 credit score (which sounds like what you have). What I learned is that credit offers come to one of two kinds of people: people with really good credit and people with moderately shitty credit. If you have no credit then there's no offer for you. The best way I found to improve my cre…

> When I started fresh I had a 500 credit score (which sounds like what you have). No, when your credit history is non-existent, the free credit score sites will happily tell you it’s much higher than that (mine was reported as 720-740 when I lacked history), but you’ll still get auto-rejected for everything. Interestingly, I emailed Arnold Kling, an economist writing about the subprime market at the time (2007) and…

Did you ever get the situation sorted? If so, any tips?