Credit Karma Money Lawsuit Claims Accounts Are Not as Secure as Advertised

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A proposed class action lawsuit alleges that Intuit and subsidiary Credit Karma have failed to maintain reasonable account security and customer protection measures for Credit Karma Money accounts, causing thousands of checking and savings accountholders to suffer financial losses, unauthorized withdrawals and account lockouts. 

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The 52-page complaint says although Credit Karma Money accountholders are promised FDIC-insured deposits, no fees and secure online access, thousands of users have experienced unauthorized withdrawals, a denial of timely access to their money, or both, due to the defendants’ lack of adequate security protections. Per the filing, the defendants’ security representations conveyed to reasonable consumers that they could entrust the companies with their money and personal information, but the volume of consumer complaints instead “demonstrate[s] systemic deficiencies” with Intuit and Credit Karma’s account protection methods, the case alleges.

Further, the suit claims that Intuit and Credit Karma, despite receiving prompt notice of the unauthorized transactions, have failed to conduct reasonable investigations or recredit affected accounts, as required by the federal Electronic Funds Transfer Act (EFTA). The lawsuit says that consumers who’ve experienced unauthorized account access have often been met with “delayed responses, inadequate investigations” and loss of access to their accounts or funds for weeks or months, which the suit says the EFTA “was expressly designed to prevent.” 

Compounding Intuit and Credit Karma’s security failures, the companies’ account control systems frequently lock legitimate users out of their own accounts while failing to prevent fraudulent transactions, the case adds, claiming consumers seeking help run up against “ineffective or nonexistent customer support.” 

“Thousands of users have reported fraudulent withdrawals from their Credit Karma Money accounts and extended account lockouts that prevent access to their own funds,” the complaint reads. “These failures reflect systemic negligence: Defendants neither implemented sufficient fraud-prevention mechanisms nor maintained effective customer support channels to respond to victims of unauthorized activity.” 

Intuit and Credit Karma’s failures to employ reasonable safeguards for consumer accounts and maintain adequate systems for reporting and addressing unauthorized activity have “directly enabled” unauthorized access, fraudulent transactions and loss of access to money, the case alleges. 

According to the class action lawsuit, Intuit and Credit Karma have “long been on notice” that Credit Karma Money accounts were vulnerable to unauthorized access, fraudulent transactions and account access issues. As early as 2020, the filing says, consumers began to voice “widespread and persistent” complaints about improper transfers, missing funds and account lockouts. 

“Despite this notice, Defendants failed to remedy deficiencies in their authentication systems, transaction monitoring, and fraud-response procedures. Defendants did not implement adequate measures to prevent unauthorized access or to ensure that reported fraud was promptly investigated and resolved,” the suit reads. 

The Credit Karma Money accounts lawsuit looks to cover all individuals in the United States who experienced unauthorized transactions, unauthorized access, or loss of access to their Credit Karma Money accounts “as a result of Defendants’ inadequate account security, fraud-prevention systems, or customer-response practices.”

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