On October 23, the Consumer Financial Protection Bureau (CFPB) announced that Apple Inc. and Goldman Sachs’ joint venture, the Apple Card, provided inadequate customer service to hundreds of thousands of cardholders, misrepresenting transactions and card functionalities. As a result, the two companies are required to pay a hefty $89 million in fines and establish a victim relief fund.
Under the ruling, tech giant Apple will contribute $25 million to the CFPB’s victim relief fund, while Goldman Sachs is obligated to pay nearly $20 million in restitution to victims, in addition to a $45 million civil penalty. Goldman Sachs can only offer consumer-facing credit cards again if they can prove compliance with federal laws.
The Apple Card was launched in 2019 to boost Apple’s retail sales and assist Goldman Sachs in becoming a significant player in the consumer finance market. However, by 2022, Goldman Sachs revealed that CFPB was investigating its practices related to refunds and billing disputes.
CFPB Director Rohit Chopra emphasized, “Apple and Goldman Sachs unlawfully evaded their legal obligations to Apple Card borrowers. The actions of large tech companies and Wall Street firms should not appear to be unbounded by federal law.”
The CFPB alleged that Apple failed to report thousands of consumer account transaction disputes to Goldman Sachs, and after sharing these reports, Goldman Sachs didn’t comply with federal investigation requirements.
Furthermore, the CFPB discovered that the two companies misled consumers regarding interest-free payment plans for Apple devices. This led consumers to believe that they were eligible for interest-free payments when using the Apple Card to purchase items like iPhones. Additionally, Goldman Sachs reportedly misled consumers regarding certain refund requests, which caused consumers to incur extra interest charges.
In response, Apple stated that they “strongly disagree” with the CFPB’s portrayal of their actions, asserting that “Apple is committed to providing fair and transparent financial products. We became aware of these unintentional issues years ago, and since then, we have worked closely with Goldman Sachs to promptly address these problems and assist affected customers.” Goldman Sachs added that the Apple Card is considered one of the most consumer-friendly credit cards available, noting their ongoing efforts to resolve the technical and operational challenges encountered post-launch and their collaboration with impacted customers. Both companies confirmed they have reached a settlement with the CFPB.
