Apple and Goldman Sachs have agreed to pay over $89 million to settle an investigation into their credit-card partnership. The Consumer Financial Protection Bureau (CFPB) accused the companies of misleading customers and mishandling disputes, causing customer service breakdowns and misrepresentations that affected hundreds of thousands of Apple Card users. The CFPB also found that the companies misled consumers about interest-free payment plans for Apple devices.
As part of the settlement, Goldman will pay at least $19.8 million in redress and a $45 million penalty, while Apple will pay a $25 million fine. The CFPB has also banned Goldman from launching a new credit card unless it provides a “credible plan” that the product will comply with the law. CFPB Director Rohit Chopra stated that “Apple and Goldman Sachs illegally sidestepped their legal obligations for Apple Card borrowers” and that “big Tech companies and big Wall Street firms should not behave as if they are exempt from federal law.”
Goldman has addressed “certain technological and operational challenges that we experienced after launch and have already handled them with impacted customers,” according to a spokesperson for the bank, who added that the bank is pleased to have reached a resolution with the CFPB. Apple worked closely with Goldman to address the issues and help impacted customers, according to a spokesperson for the company, who also stated that “while we strongly disagree with the CFPB’s characterization of Apple’s conduct, we have aligned with them on an agreement.”
The CFPB found that Apple failed to send tens of thousands of customer disputes of Apple Card transactions to Goldman Sachs, and when the technology giant did send disputes to the bank, Goldman did not adhere to federal requirements for investigating the disputes. The CFPB also stated that the companies misled consumers about interest-free payment plans for Apple devices, causing many customers to expect to automatically get interest-free monthly payments on those purchases, only to find they were charged interest.
Goldman is trying to extricate itself from the Apple partnership, which has been beset by problems since its launch in 2019. The bank has faced accusations of bias over computer models that determined who gets the card. In 2022, it disclosed the CFPB had been looking into the company’s credit-card practices, including how it resolves incorrect bills and processes refunds. Last year, Goldman said that investigations into that business had expanded beyond the CFPB to include other government agencies.
CFPB Director Chopra stated that “the execution was a mess,” adding that key systems related to the Apple card were not ready before the card roll-out. The card launched despite warnings from third-parties to Goldman about technological issues affecting its disputes system, according to the CFPB. The CFPB will “closely police” Goldman Sachs if it makes another attempt to enter the credit card market to avoid similar issues, it said.
Read more:
Panel Recommends No Change To Courtroom Camera Ban Despite Push…
UK Law Firm Partners Now Charging Over £1,000 Per Hour Amid Competitive Pressures
Fortress’ Billions Quietly Power America’s Biggest Legal Fights