Goldman Sachs and Apple must pay $89.8 million to the Consumer Financial Protection Bureau for failures associated with their Apple Card program, the watchdog announced Wednesday.

Thousands of consumer disputes of Apple Card transactions were never sent from Apple to Goldman, and the bank failed to properly investigate those the tech company did send, the CFPB asserted.

The failures, which were in part due to known technological issues within the program’s dispute systems, led consumers to face long waits to get their money back and, in some cases, incorrect negative information was added to some users’ credit reports.

Goldman must pay at least $19.8 million in redress and a $45 million civil money penalty, and Apple must pay a $25 million civil money penalty to the agency’s victims relief fund, according to the CFPB order. Goldman is also restricted from launching another credit card “unless it can provide a credible plan that the product will actually comply with the law,” the watchdog agency said.

“Apple and Goldman Sachs illegally sidestepped their legal obligations for Apple Card borrowers,” CFPB Director Rohit Chopra said in a prepared statement. “Big Tech companies and big Wall Street firms should not behave as if they are exempt from federal law.“

Debuting in August 2019, the Apple Card marked a significant venture into consumer lending for both Apple and Goldman by allowing the tech firm to offer a financing tool to promote sales of its popular but pricey mobile device and phone products.

Four months later, the companies introduced a monthly installment feature, which allowed users to finance their new Apple purchases, interest-free.

But the firms misled cardholders about the interest-free payment plan by not automatically enrolling them and then charging them interest, the CFPB said. Thousands of consumers purchased devices only to be hit with unexpected interest charges, the bureau added.

Apple Card “is one of the most consumer-friendly credit cards that has ever been offered,” a Goldman spokesperson said Wednesday, adding that the bank and Apple “worked diligently to address certain technological and operational challenges that we experienced after launch and have already handled them with impacted customers.”

An Apple spokesperson said in an email that the firm “strongly disagrees[s] with the CFPB’s characterization of Apple’s conduct.”

“Upon learning about these inadvertent issues years ago, Apple worked closely with Goldman Sachs to quickly address them and help impacted customers,” the spokesperson said, adding that they “look forward to continuing to deliver a great experience for our Apple Card customers.”

Reports have swirled for months that Goldman would face a penalty over its partnership with Apple. Both firms reportedly sought to end the Apple Card partnership last year. Goldman’s partnership on its other major credit card – with automaker GM – will end next year, when Barclays takes over the contract.

By Gabrielle Saulsbery on Oct 23, 2024
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