The ‘Create groups as contacts’ setting requires paying special attention to your filtering. If you are using filter groups on your source environment(s), those groups are in scope and will be created as contacts in the target! This is different to the default behavior which creates those groups in the target and also adds the matched/created users to them. If you’re also using group filters in the target, then you will need to manually add those users to a group in the target filter.
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