Apple and Goldman Sachs have been ordered by regulators to pay nearly $90 million in fines and customer restitution for what has been referred to as “Apple Card failures.”
The Consumer Financial Protection Bureau (CFPB) highlighted issues with customer service and misrepresentations that impacted hundreds of thousands of Apple Card users. One major concern was the failure of Apple to forward “tens of thousands” of disputed transactions to Goldman Sachs for resolution. When disputes were sent, Goldman Sachs allegedly did not adhere to federal regulations for investigating them.
The Apple Card was launched in August 2019, with Goldman Sachs handling credit extension and account management. Both companies had limited prior experience in the consumer credit market. As of January this year, Apple reported 12 million Apple Card holders.
Breakdown of CFPB Penalties
-
Apple must pay a $25 million civil penalty.
-
Goldman Sachs has been ordered to pay a $45 million civil penalty and $19.8 million in customer restitution.
-
Goldman Sachs is also prohibited from launching any new credit card until it can demonstrate compliance with the law.
Findings of the CFPB Investigation
-
One key issue identified was the handling of disputed transactions. The CFPB alleges that the card was launched despite warnings from third parties about technological flaws in the dispute resolution system. This led to delays in resolving disputed charges and, in some cases, inaccuracies on customers’ credit reports.
-
Additionally, the CFPB found that consumers were misled about interest-free payment plans for Apple products and that Goldman Sachs provided false information regarding certain refunds.
Next Steps for Impacted Consumers
Many eligible consumers have already received compensation, as per a statement from the CFPB. Those still eligible will be contacted by Goldman Sachs.
Response from the Companies
Goldman Sachs disclosed in a 2022 SEC filing its cooperation with the CFPB’s investigation. Both companies have defended the Apple Card, stating that the issues have been addressed.
Apple mentioned in a statement to CNN that they worked with Goldman Sachs to resolve issues when they were initially discovered.
Goldman Sachs ventured into consumer banking in 2016 with its Marcus brand but has since refocused on its core business, halting new personal loan offerings earlier this year.
Co-branded credit cards, like the Apple Card, have faced challenges in recent years due to potential conflicts between the partnering entities.