Apple Card Issues Could Cost Goldman Sachs More Than $50 Million
Credit: AppleToggle Dark Mode
The Consumer Financial Protection Bureau may order Goldman Sachs to pay over $50 million in fines for mishandling issues with the Apple Card and other credit cards.
Goldman Sachs has been working to wriggle out of its arrangement with Apple for the Apple Card, which could cost it millions to convince another financial institution to take the popular credit card over. However, it could end up to paying out even more money before it rids itself of the credit card.
According to a report from the Wall Street Journal (Apple News+), the Consumer Financial Protection Bureau (CFPB) will soon order Goldman Sachs to pay penalties for issues with its credit card business as a whole. The decision is expected to be handed down this week, and while the exact penalties are unknown, Goldman Sachs is expected to be hit with fines in excess of $50 million.
The CFPB began investigating Goldman Sachs two years ago to examine how it dealt with billing errors, credit card fraud, and refunds. One source mentioned in the report claimed the probe “almost entirely” on the Apple Card partnership.
The probe has been ongoing since 2022, when Goldman first disclosed the investigation into its “credit card account management practices.” The probe included a close look into the lag time the financial firm took in addressing fraud problems and issuing refunds, as well as how it handled other billing errors.
Goldman Sachs executives apparently privately blame Apple for the extra regulatory scrutiny. Apple requires Goldman Sachs to send customers their bills at the beginning of the month instead of staggering the billing dates like most credit card issuers. This is said to have made it difficult for the company’s customer service representatives to deal with the repeated and heavy monthly flood of queries.
While Goldman couldn’t convince Apple to alter the billing process, the Cupertino firm is reportedly open to working with possible future Apple Card issuer JPMorgan Chase. Several reports have indicated that JPMorgan Chase is in talks with Apple about taking over the program from Goldman Sachs.
Since 2020, Goldman Sachs has suffered heavy losses in the consumer lending sphere, losing over $6.5 billion. It recently posted a $415 million pretax loss for the third quarter related to its sale of the General Motors credit card program to Barclays.
In April, we reported that Apple was in discussions with several potential suitors, including JPMorgan Chase, Capital One, and Synchrony Financial.
If JPMorgan Chase does make a deal to take over the Apple Card, it would deepen an already close relationship between the banking giant and the iPhone maker. JPMorgan already pays Apple whenever one of its millions of credit card customers pays for something using one of their cards through Apple Pay, and it also offers Chase customers discounts on Apple products.
Goldman Sachs and JPMorgan will need to have a meeting of the minds on the terms and conditions of the credit card transfer, as the pair will need to agree on a transaction price for the existing card balances. Another point of negotiation will include the current consumer rewards program connected to the Apple Card.
