CFPB Orders Apple and Goldman Sachs to Pay $89 Million for Mismanagement of Apple Card Transactions

NEW YORK: A federal regulator said Monday that Apple and Goldman Sachs must reimburse $89 million to customers for deceptive practices and mishandling of disputes over transactions involving the Apple Card. The Consumer Financial Protection Bureau said there were significant "breakdowns and misrepresentations" about its credit card partnership with Apple.

The investigation revealed that Apple had not transferred hundreds of thousands of Apple Card disputes to Goldman Sachs for resolution. Moreover, when disputes were submitted, Goldman failed to execute required federal investigations into those disputes. As a result, consumers would spend longer periods before getting refund checks from their alleged disputed charge. At times, incorrect, adverse information was even included on their credit reports.

The CFPB also revealed that Apple and Goldman misled their consumers on interest-free payments for purchases through the Apple Card. A lot of consumers believed that they would automatically receive interest-free financing on Apple purchases when the truth was that most of them charged them with interest. Some of the refund applications processed by Goldman were also shown to be misleading.

It countered that it has long been aware of the "unintended issues" for some years and was already addressing them with Goldman, contradicting the CFPB's characterization of its practices. Apple stated that "Apple Card is one of the most consumer-friendly credit cards available, and was specifically designed to support users' financial health."

Goldman Sachs spokesman Nick Carcaterra called it an honor to do business with Apple and said that the settlement with CFPB is a great deal, pointing out that both companies are already taking measures to help those customers.

The order by the CFPB is in terms of refunds to the consumer and penalties on both companies: It determines that Apple must pay a penalty of $25 million; whereas Goldman Sachs, in comparison, is ordered to pay a penalty of $45 million and to pay, besides this, a restitution of at least $19.8 million. Moreover, aside from these monetary liabilities, the agency has prevented Goldman from launching any new credit card products until it can show that it is in compliance with legal standards.

"These are not just technicalities. They caused real harms to real people," said CFPB Director Rohit Chopra, mentioning that hundreds of thousands of Apple Card users were affected. "Big Tech companies and big Wall Street firms should not behave as if they are exempt from federal law," he added.

Apple and Goldman Sachs co-launched the Apple Card in 2019, a successful credit card running on the Mastercard network, for the most part designed to be used with devices such as the iPhone and Apple Watch. The CFPB claims it may have launched the card a little too early since there had been warnings from other third-party sources even before the card was first unveiled.

Goldman Sachs has faced issues in its consumer banking efforts. It has also recently terminated its credit card partnership with General Motors, which was seized by the agency last week.