Apple and Goldman Sachs have been accused by the Consumer Financial Protection Bureau (CFPB) of payment issues and transactional faults, as the agency levied hefty fines against the two for their alleged mishandling of the Apple Card credit service.
The CFPB took action against the corporations “for customer service breakdowns and misrepresentations that impacted hundreds of thousands of Apple Card users,” the agency said in an Oct. 23 statement.
“Apple failed to send tens of thousands of consumer disputes of Apple Card transactions to Goldman Sachs, and when Apple did send disputes to Goldman Sachs, the bank did not follow numerous federal requirements for investigating the disputes,” according to the statement.
The federal agency has ordered the companies to pay nearly $90 million in penalties for, among other things, making users wait for long periods of time for the settlement of disputed charges, and reporting incorrect negative information to credit reporting agencies.
Goldman Sachs is required to pay at least $19.8 million to redress harm to customers and a $45 million civil money penalty, and Apple must pay a $25 million civil money penalty.
In addition, Goldman Sachs has been restricted by the CFPB from launching a new credit card unless the bank proves it has a “credible plan that the product will actually comply with the law.”
When Apple Card was launched in 2019, the card was touted as featuring no fees, lower-than-usual interest, “an easy-to-understand view of spending,” security features, and a compelling rewards program. The tech behemoth reported 12 million cardholders using the service earlier this year.
According to CFBP Director Rohit Chopra, speaking during a press call on Oct. 23: “The plan was that Goldman Sachs would be responsible for figuring out the mechanics of financing and account servicing, while Apple would manage marketing and other key activities. The execution was a mess.
“Apple and Goldman Sachs illegally sidestepped their legal obligations for Apple Card borrowers.”
Many customers were led to believe they would receive interest-free financing when purchasing Apple products with their card, but they were charged substantial interest, he said.
Goldman’s Apple Card Deal
Following the CFPB decision, Nick Carcaterra, vice president of corporate communications at Goldman Sachs, said in an emailed statement to The Epoch Times: “We are pleased to have reached a resolution with the CFPB and are proud to have developed such an innovative and award-winning product alongside Apple.“Apple Card is one of the most consumer-friendly credit cards that has ever been offered. We worked diligently to address certain technological and operational challenges that we experienced after launch and have already handled them with impacted customers.”
Apple did not respond to a request for comment by publication time.
Those practices included the application of refunds, crediting of nonconforming payments, billing error resolution, advertisements, and reporting to credit bureaus.
The bank made over $3 billion in net earnings in the most recent third quarter. Total third-quarter revenues came close to $13 billion.
However, the firm reported setting aside $397 million for credit losses in the third quarter, up from $7 million in the same period last year.
In January 2023, Goldman revealed in a regulatory filing that its Platform Solutions segment, which includes Apple Card, had suffered more than $1.2 billion in pretax losses in the first nine months of 2022.
