The Federal Trade Commission ordered Credit Karma to pay $3 million to clients who it claims were duped into applying for items they weren’t qualified for.

FTC took action to stop credit karma from tricking consumers with allegedly false “pre-approved” credit offers. One third of some “pre-approved” offers resulted in denials; company to pay $3 million and halt deceptive claims. “Credit Karma’s false claims of ‘pre-approval’ cost consumers time and subjected them to unnecessary credit checks,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will continue its crackdown on digital dark patterns that harm consumers and pollute online commerce.”

The FTC stated in a news release announcing the settlement that Credit Karma utilized “dark patterns” to fool consumers into believing they were “pre-approved” for credit card offers that they did not normally qualify for.

According to the FTC, the firm exploited statements that clients were “pre-approved” and had “90% odds” to lure them to apply for deals that they did not eventually qualify for. The ruling from the agency demands the corporation to pay $3 million to people who wasted time applying for these credit cards and to stop making such fraudulent statements.

According to the FTC’s stated complaint, Credit Karma falsely told many consumers that they had been “pre-approved” for credit offers from February 2018 to April 2021, leading consumers to apply, incur a hard inquiry on their credit reports, and, if denied, potentially harm their credit scores unnecessarily. According to the FTC’s complaint, Credit Karma was aware that its purported “pre-approvals” conveyed false “certainty” to consumers, based on the results of experiments, also known as A/B testing, which demonstrated that consumers were more likely to click on offers that said “preapproved” than those that said they had “excellent” odds of being approved.

Credit Karma violated Section 5 of the Federal Trade Commission Act by falsely representing that consumers were pre-approved for credit offers or had 90% odds of approval.

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