Apple and Goldman Sachs have agreed to pay $89 million to settle allegations of severe customer service lapses tied to the Apple Card, as announced by the Consumer Financial Protection Bureau (CFPB) on Wednesday.
Launched in 2019, Apple Card marked an innovative partnership between tech giant Apple and financial heavyweight Goldman Sachs, with Goldman managing credit and account services while Apple crafted the app and interface for Apple device users to access their Apple Card accounts. Goldman, a major player in investment banking, has faced repeated penalties over rule violations, and Apple, which has provided consumer financial services since 2014 to promote its premium products, had not previously launched a credit card. Despite their combined experience, the CFPB indicated that Apple and Goldman’s customer service failures were severe enough to prompt regulatory intervention.
“Apple Card is one of the most consumer-friendly credit cards available, and was specifically designed to support users’ financial health,” said an Apple spokesperson. However, Goldman fell short of complying with federal mandates on customer dispute responses, the CFPB found. For instance, Apple’s Wallet app featured a “Report an Issue” function for dispute claims, which Goldman was legally required to address promptly. Yet, “Goldman Sachs failed to adhere to this requirement,” the CFPB asserted, alleging that many complaints sent to Goldman were left uninvestigated, with some customers waiting over 30 days for a response or 90 days for a resolution letter.
According to the CFPB, Goldman wrongly held many customers accountable for fraudulent or unauthorized charges and even reported these charges to credit bureaus, harming customers’ credit scores. These systemic issues affected hundreds of thousands of Apple Card holders, and both companies were reportedly aware of the inadequacies in their dispute process but failed to correct them.
CFPB Director Rohit Chopra commented critically on the companies’ actions: “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.” He also emphasized that the severity of the failures has led to a prohibition against Goldman issuing further credit cards unless it “demonstrates that it can actually follow the law.”
Additionally, the CFPB claimed that Apple’s and Goldman’s marketing materials had misled customers about the card’s interest-free payment plan, particularly implying that Apple Card users wouldn’t incur monthly interest charges on Apple product purchases. Instead, the CFPB determined that Apple’s “deceptive marketing materials and illegal conduct” resulted in customers unknowingly paying interest on Apple products, which they had believed were interest-free.
Apple responded, stating that it had promptly worked with Goldman to resolve these issues as soon as it became aware of them, while also refuting the CFPB’s portrayal of the company’s actions. “While we strongly disagree with the CFPB’s characterization of Apple’s conduct, we have aligned with them on an agreement,” an Apple spokesperson said. Goldman similarly expressed satisfaction with the resolution, commenting that it had “worked diligently to address certain technological and operational challenges” since the card’s launch.
Under the settlement, Apple will pay a $25 million penalty to the victims’ relief fund. Goldman, meanwhile, is set to provide at least $19.8 million in restitution for impacted customers due to its servicing practices and misleading marketing and will pay an additional $45 million penalty.
Goldman is now restricted from launching new credit cards unless it submits a compliance plan to the CFPB. “The CFPB plans to closely police the company to avoid repeat offenses,” the bureau stated, especially given Goldman’s history of regulatory penalties. Recently, Goldman has been fined $30 million by the Commodity Futures Trading Commission for issues with swap regulations and $6 million by the Securities and Exchange Commission over alleged data reporting inaccuracies.
Goldman did not immediately comment on the CFPB’s announcement.
By fLEXI tEAM
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