Online Credit Management Platform Settles FTC Charges for Marketing Misrepresentations

An online credit management company agreed to pay $3,000,000 to settle FTC charges for misrepresentations made in marketing third-party financial products to consumers.

In its Decision and Order, FTC stated that the company displayed advertisements representing that customers were pre-approved for certain offers. FTC said that the ads were intended to boost sign-ups for the products. FTC found that many customers were not pre-approved for the offer, and nearly 30 percent of applications were denied after an underwriter review.

FTC concluded that the company knowingly and falsely represented to customers that they were pre-approved for certain offers in order to "deliberately to influence consumers' behavior." FTC said that in instances where the company did not advertise a guaranteed approval, it instead touted a high likelihood that the customer's application would be approved, or made the disclosure hard to access. FTC said that the company received numerous complaints relating to its pre-approval advertisements but continued to reassure customers that the language was accurate.

The SEC determined that the company violated FTC Act Section 5(a) ("Unfair methods of competition unlawful; prevention by Commission"). To settle the charges, the company agreed to (i) not make any representation about approval or pre-approvals, or a consumer's odds or likelihood of being approved, (ii) pay the Commission $3,000,000, and (iii) related compliance obligations.