In a financial world dominated by slick apps and eye-catching offers, few things sound as sweet as being “pre-approved!” But as many consumers have learned, that language can be dangerously misleading.

 

Back in 2022, Credit Karma agreed to a $3 million settlement with the Federal Trade Commission (FTC) after it was accused of falsely advertising pre-approvals for credit cards and loans. The settlement may feel like old news, but here’s why it still matters in 2025. Especially if you're thinking about applying for credit, managing your score, or simply trying to make smarter financial decisions.

What the FTC Found, and Why It’s Still Relevant

From 2018 to 2021, Credit Karma allegedly told users they were “pre-approved” for credit products through the app. But in reality, a significant number of those users were later rejected by the lenders, according to the FTC. Worse still, these failed applications triggered hard inquiries on their credit reports. For those not in “the know”, those dings can drop a score by several points and linger for up to two years.

 

For anyone who is rebuilding credit or seeking new financial tools, the impact of a few points lost on a credit report can mean the difference between approval and rejection, or thousands more in interest over the life of a loan.

 

Though the FTC’s enforcement action resulted in a settlement, Credit Karma did not acknowledge fault. The $3 million payout was intended to compensate users for the lost time and potential harm.

 

But here’s the kicker: the issue of misleading financial marketing isn’t anywhere close to going away.

Terms like “pre-approved”” are often used loosely, leaving consumers confused about what’s guaranteed versus what still depends on a full credit review. (iStock)

Are You Still Eligible to File a Claim?

If you used Credit Karma between 2018 and 2021, applied for a credit product based on a “pre-approval,” and were denied, you may be one of the individuals impacted.

 

As of June 2025, the FTC’s claims process for this case has been completed.  However, it has  since launched similar investigations into other fintech platforms. If you think you were affected in similar situations, here’s what you can do:

  • Visit reportfraud.ftc.gov to file a complaint about misleading financial marketing.
  • Check if you were contacted by the FTC via email or mail for this or similar settlements.
  • Sign up for consumer alert emails from the FTC to stay updated on new actions and restitution opportunities.

Local Georgia agencies like the Office of Consumer Protection also offer guidance for filing fraud reports at consumer.georgia.gov.

Don’t Fall for the “Pre-Approval” Trap Again

The truth is, misleading credit marketing hasn’t gone away. Apps and online lenders continue to use persuasive language that can blur the line between a targeted offer and a guaranteed one.

 

To protect yourself:

  • Pre-qualification ≠ Pre-approval. If you're “pre-qualified,” it usually just means your credit profile might match. Actual approval still depends on a deeper review.
  • Hard pulls affect your score. Even one application can drop your score, especially if your credit history is limited.
  • Verify directly with lenders. Before hitting “apply,” check with the lender's official site or customer support to confirm your approval odds.

Want to play it even safer? Try using tools that conduct only “soft pulls” on your credit, which don’t impact your score.

“Go ahead and apply for the card,” he said. “You’re pre-approved!” he said. (iStock)

Real Talk: Could This Happen Again?

Consumer watchdogs, including the FTC and the Consumer Financial Protection Bureau (CFPB), have flagged ongoing concerns about misleading marketing tactics from fintech platforms and even traditional lenders. Terms like “pre-approved” or “you qualify” are often used loosely, leaving many consumers confused about what’s guaranteed versus what still depends on a full credit review.

 

These misunderstandings aren’t just inconvenient, they can be costly. With the average credit card APR hovering just over 24% in mid-2025, a denied application or unexpected hard inquiry could make future credit more expensive or harder to obtain. In a world where your credit score shapes your financial opportunities, clarity should be considered a necessity, not just a courtesy. 

Final Thoughts for Borrowers

Whether you’re a young professional in Midtown trying to build credit or a retiree in Cobb County looking for a low interest card, the lesson here is universal: don’t trust glossy promises over verified facts.

 

Ask yourself: Do I understand what this offer really means? Could applying hurt my score? Have I done my due diligence?

 

The good news is that empowered consumers make smarter choices. In 2025, that starts with knowing the difference between a marketing hook and a meaningful opportunity.

 

Stay sharp, Georgia.