The US Consumer Financial Protection Bureau (CFPB) has fined Apple and Goldman Sachs for misleading Apple Card customers and mishandling consumer disputes related to the service.
The two companies have been ordered to pay more than $89 million in penalties.
The watchdog found Apple failed to send Goldman Sachs tens of thousands of consumer disputes related to the service. Even in the cases when the disputes were sent, CFPB found the bank did not follow federal requirements when investigating the cases.
“Apple and Goldman Sachs illegally sidestepped their legal obligations for Apple Card borrowers,” CFPB Director Rohit Chopra said. “Big Tech companies and big Wall Street firms should not behave as if they are exempt from federal law.”
Apple and Goldman Sachs were also found to have misled consumers regarding the terms of the Apple card payment plan. Many customers thought they would automatically get interest-free monthly payments when buying Apple devices with their Apple Card and were then charged interest. Goldman Sachs also misled consumers about the refund terms and conditions, leading to additional interest charges.
As a result, the bureau has ordered Apple to pay a $25 million fine. Goldman Sachs has been ordered to pay a $45 million civil money penalty and over $19.8 million in redress. The CFPB has also banned the bank from launching a new credit card unless it can provide a “credible plan” ensuring compliance with federal law.
“These failures are not mere technicalities,” Chopra added. “They resulted in real harm to real people.”
Apple and Goldman launched the Apple Card in 2019 despite third-party warnings that the technology was not ready to support it. This led to consumers facing long waits to get money back for disputed charges, and some had incorrect negative information added to their credit reports, CFPB said.
Goldman Sachs said in a statement to the Financial Times it had “worked diligently to address certain technological and operational challenges that we experienced after launch and have already handled them with impacted customers”.
Apple added: “Upon learning about these inadvertent issues years ago, Apple worked closely with Goldman Sachs to quickly address them and help impacted customers. While we strongly disagree with the CFPB’s characterisation of Apple’s conduct, we have aligned with them on an agreement.”
The incident marks a significant challenge for both Apple and Goldman Sachs in their venture into consumer finance. As per court filings, neither of the two companies has admitted or denied the watchdog’s findings.
