Apple and Goldman Sachs Fined $89 Million Over Apple Card Failures

Apple and Goldman Sachs have been ordered to pay a combined $89 million in penalties by the U.S. Consumer Financial Protection Bureau (CFPB) due to mishandling issues related to the Apple Card. The companies were found to have mishandled customer disputes and credit reports, leading to financial harm for many users. As a result, Goldman Sachs has also been temporarily barred from issuing new credit cards until compliance measures are established.

According to the CFPB, Apple failed to forward tens of thousands of customer disputes regarding the Apple Card to Goldman Sachs, the issuing bank. Even when disputes were passed on, Goldman did not meet federal requirements for investigating the claims. These lapses led to delays in resolving customer issues and, in some cases, incorrect negative information appearing on credit reports.

The agency further stated that the credit card was launched before the dispute system was fully functional, despite warnings from third parties about unresolved technical issues. This premature rollout left many consumers waiting long periods to recover disputed funds and dealing with inaccurate credit reporting.

In addition to dispute mishandling, the CFPB found that Apple and Goldman Sachs misrepresented the card’s interest-free payment plans for Apple products. While the companies marketed the card’s lack of fees such as annual or foreign transaction fees, some purchases incurred interest charges.

Apple, while disagreeing with the CFPB’s characterization, acknowledged the issues and stated that it had worked closely with Goldman Sachs to resolve them. “Apple Card is one of the most consumer-friendly credit cards available, designed to support users’ financial health,” an Apple spokesperson said, adding that Apple swiftly addressed the problems once they were identified.

Goldman Sachs expressed satisfaction with the resolution of the matter, noting that it had worked diligently to resolve technological and operational challenges following the card’s launch and had taken steps to assist affected customers.

As part of the settlement, Goldman Sachs will pay $45 million in fines and provide $20 million in redress to affected customers. Apple will contribute $25 million in penalties. Furthermore, Goldman is prohibited from launching any new credit card products unless it can provide a credible plan demonstrating compliance with regulatory standards.

This penalty is the latest in a series of setbacks for Goldman Sachs’ consumer lending arm, which recently ended its credit card partnership with General Motors and was replaced by Barclays. Launched in 2019, the Apple Card initially saw significant growth, with Goldman lending $10 billion by the end of that year.

In April 2023, Apple introduced a high-yield savings account in partnership with Goldman Sachs for Apple Card holders, offering a 4.15% interest rate and a feature allowing users to save cashback earned through card purchases. Despite these developments, the CFPB’s actions highlight ongoing challenges in the companies’ credit card operations.