Goldman Sachs and Apple Fined Over Credit Card Operations
On Wednesday, federal regulators imposed significant penalties on both Goldman Sachs and Apple, totaling over $89 million, due to their mismanagement of the Apple Card credit-card business. This ruling directly impacts hundreds of thousands of users of the Apple Card.
The Consumer Financial Protection Bureau (C.F.P.B.) mandated that Goldman Sachs pay a fine of $45 million, while Apple faces a penalty of $25 million. Additionally, Goldman is required to issue at least $19.8 million in refunds to affected customers. As part of the ruling, regulators have also prohibited Goldman from introducing any new credit card products until it submits a “credible plan” proving that it will adhere to legal requirements.
The C.F.P.B.’s extensive investigation, which spanned several years, delved into various issues, particularly focusing on Goldman’s customer service operations. It scrutinized how the bank addressed concerns regarding fraud and refunds within its partnership with Apple. The investigation revealed that the companies’ actions resulted in customers facing inaccurate credit reports and unresolved disputes concerning charges.
Rohit Chopra, the director of the C.F.P.B., emphasized during a press call on Wednesday that both Apple and Goldman failed to manage customer disputes effectively. He pointed out that even when Goldman was notified of these disputes, the bank frequently neglected to comply with federal regulations that require prompt investigation and resolution.
Moreover, the agency highlighted that both companies misled consumers regarding interest-free payment options for Apple products. Despite assurances that customers would benefit from interest-free financing when using the Apple Card to purchase Apple devices, many ended up incurring significant interest charges. Chopra remarked, “The execution was a mess,” referring specifically to the rollout of the credit card partnership that began in 2019.