Apple and Goldman Sachs have been fined $89 million by the Consumer Financial Protection Bureau (CFPB) for mishandling Apple Card transaction disputes and misleading customers about interest-free payment options. The fines follow an investigation into both companies’ practices, affecting “hundreds of thousands” of Apple Card users, according to the CFPB.
Apple failed to send “tens of thousands” of disputed transactions to Goldman Sachs, delaying the bank’s ability to address the issues. When the transactions were eventually forwarded, Goldman Sachs did not fulfill its legal obligations to investigate the disputes in accordance with federal law. The CFPB determined that Goldman Sachs failed to complete timely inquiries into the disputes as required.
Additionally, Apple and Goldman Sachs are accused of misleading cardholders about interest-free financing for Apple devices. Many Apple Card users believed they would automatically receive interest-free payment options when purchasing Apple products but were charged interest because they were not automatically enrolled in the program as expected. The CFPB also found that the interest-free payment option was only shown to users browsing with Apple’s Safari browser, which limited access for customers using other browsers.
Penalties and CFPB Orders
The fines imposed include a $25 million civil money penalty for Apple, which will be directed to the CFPB’s victims relief fund. Goldman Sachs is required to pay $19.8 million in redress to impacted customers, as well as a $45 million civil money penalty. Additionally, the CFPB has mandated that Goldman Sachs cannot introduce any new credit card products until it presents a credible compliance plan to ensure adherence to federal regulations.
According to The Verge, Goldman Sachs issued a statement emphasizing its commitment to resolving technological and operational challenges that arose following the Apple Card’s launch. Nick Carcaterra, representing Goldman Sachs, noted that the company has worked to address the issues and reached a resolution with the CFPB.
Apple also released a statement via MacRumors, where an unnamed spokesperson acknowledged the inadvertent issues and emphasized that Apple had collaborated with Goldman Sachs to resolve them, despite disagreeing with the CFPB’s characterization of the situation.
Potential End of Apple-Goldman Sachs Partnership
The CFPB’s action against Apple and Goldman Sachs stems from the launch of the Apple Card in 2019. The product was initially marketed as a financial tool designed to help customers manage their finances more effectively. However, as time passed, Goldman Sachs reportedly reconsidered its role in consumer lending, leading to discussions with JPMorgan about possibly taking over the partnership for operating the Apple Card.
