CFPB Hits Apple and Goldman Sachs With $89 Million Fine Over Apple Card
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As expected, credit firm Goldman Sachs has been hit with a multi-million dollar penalty related to its handling of the Apple Card credit card. However, Apple also took a hit in the pocketbook as it’s been ordered to pay millions of dollars in fines also.
The Consumer Financial Protection Bureau (CFPB) announced today that Apple and Goldman Sachs will both be fined over issues that affect hundreds of thousands of Apple Card customers. The CFPB says Apple failed to provide the details of thousands upon thousands of disputed transactions to Goldman Sachs, which then failed to follow federal investigation requirements.
Goldman Sachs will be forced to pay at least $19.8 million in redress and a $45 million civil money penalty. Apple is not getting off scot-free, as the Cupertino-based company must pay a $25 million civil penalty.
Goldman Sachs has already lost millions due to the Apple Card, and it’s not going to stop taking a financial hit any time soon as it struggles to rid itself of the ill-fated marriage it has with Apple and its credit card. The credit firm is not only being hit with penalties, but it will also no longer be allowed to launch new credit cards.
“Apple and Goldman Sachs illegally sidestepped their legal obligations for Apple Card borrowers. Big Tech companies and big Wall Street firms should not behave as if they are exempt from federal law,” said CFPB Director Rohit Chopra. “The CFPB is banning Goldman Sachs from offering a new consumer credit card unless it can demonstrate that it can actually follow the law.”
Consumers reportedly faced extended delays in having disputed charges refunded, and some customers’ credit status was affected. The CFPB says Goldman Sachs ignored third parties that warned them ahead of the Apple Card launch that Apple’s dispute systems were inadequate.
Apple’s inadequate dispute systems led to users not always being told of an interest-free payment option when one was available. The CFPB says Apple basically misled customers into believing they would automatically get interest-free payment plans, but instead, charges were imposed.
Since Goldman Sachs ignored the third-party warnings and did not follow federal rules related to disputes, the CFPB has banned the finance firm from launching any new credit card. However, Goldman Sachs can get the ban lifted if it can provide a credible plan showing that it will comply with the law.
While being banned from launching new credit cards may be a public embarrassment for Goldman Sachs, the firm may be internally breathing a sigh of relief at the ruling. The ban is against consumer-aimed credit cards, a business Goldman Sachs has been working to get out of.
Goldman took a big swing when it came to consumer credit cards. The financial firm not only had a partnership with Apple but also entered a similar partnership with General Motors, which is also in the process of dissolving.
Apple has not yet pulled off its plans to expand the Apple Card to other countries, despite Apple CEO Tim Cook’s promise to expand overseas at its 2019 launch. It should be noted that Apple expanded its partnership with Goldman Sachs with the Apple Card Savings Account in 2023.
Unfortunately for Goldman Sachs, the partnership on both offerings has cost the financial firm dearly. While Goldman’s CEO once praised the partnership, another executive reportedly said more recently, “We should never have done this f@$*ing thing.”
