Carolinas customers to get part of $2.5M settlement in Credit Karma deceptive claims case

Nearly 3,000 consumers in the Carolinas will see a piece of Credit Karma’s more than $2.5 million nationwide payout for misleading them with “deceptive” credit offers, the Federal Trade Commission said Thursday.

The Silicone Valley fintech company has a large presence in Charlotte, where it has had its East Coast headquarters since 2016.

The FTC is sending 50,994 payments to people across the country and Puerto Rico who requested compensation because Credit Karma claimed “90% odds” of “pre-approved” credit offers to entice people who didn’t qualify to apply. It also caused their credit scores to drop, the FTC said.

“Credit Karma agreed to a FTC order that required the company to stop making these types of deceptive claims and to pay money to compensate consumers who were harmed,” the FTC said in a news release Thursday. The agency promotes competition and protects and educates consumers.

Nearly one-third of the applicants from February 2018 to April 2021 were denied, the FTC said in September 2022 when it ordered Credit Karma to pay people.

“Credit Karma’s false claims of ‘pre-approval’ cost consumers time and subjected them to unnecessary credit checks,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said at that time.

Credit Karma disagrees with the FTC allegations. Credit Karma helps customers understand their finances, which includes the likelihood of financial product approvals, the company said in a statement Thursday to The Charlotte Observer.

“Credit Karma is not a lender and does not make lending decisions,” Credit Karma 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.”

Credit Karma payouts in the Carolinas

In North Carolina, 1,841 people will receive part of nearly $92,000 in compensation, FTC refund data on its website show. In South Carolina, 911 people will receive part of over $45,500.

North Carolina had the seventh-highest payout behind Illinois, Georgia, New York, Florida, Texas and California.

For this refund, every recipient will receive the same amount: $49.96, FTC spokesman Jay Mayfield said. The FTC will send payments by check or PayPal to claims made before the March 4 deadline.

Credit Karma in Charlotte

In May 2022, Credit Karma expanded its presence in Charlotte making a $13 million investment in a new 95,000-square-foot, three-floor office at 13146 Ballantyne Corporate Place.

The company opened the East Coast headquarters eight years ago, starting with 25 employees. Credit Karma had over 450 full-time employees in 2022, and at the time said it would add 600 jobs through 2026.