Apple and Goldman Sachs have been fined $89 million by the Consumer Financial Protection Bureau for “mishandling consumer disputes” regarding Apple Card transactions.
According to the Bureau, tech giant Apple did not send thousands of disputes to Goldman Sachs. When the bank did receive the disputes, the bureau says the bank did not follow federal requirements when the cases were under investigation.
Now, the CFPB ordered Goldman Sachs to pay $45 million in a civil penalty and $19.8 million in redress. The redress payments are meant to compensate individuals, businesses, and other entities that have been harmed by the bank’s misconduct. Additionally, the bank was not allowed to launch new credit cards until it showed a plan to comply with the law.
Apple, on the other hand, was fined $25 million by the Bureau.
The fine shows banks, big tech firms should not be above the law
CFPB director, Rohit Chopra commented on the fine that Apple and Goldman Sachs face, saying, “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.”
Five years ago, Apple launched its Apple Card. The card essentially works as a credit card that works with Apple Pay, which is the company’s digital wallet service.
The tech giant partnered with Goldman Sachs, with the bank becoming Apple’s official issuing bank, and had advertised the credit card as simpler and more transparent than conventional credit cards.
THE CFPB investigation showed Apple and Goldman Sachs misled consumers
Immediately after the Apple Card was launched by both companies, it launched a feature that allowed consumers to finance Apple devices such as iPhones and iPads through “interest-free” monthly installments.
The CFPB investigation showed that both Apple and Goldman Sachs misled consumers as to these “interest-free” monthly installments. Many consumers thought that, through this card, they would automatically attain interest-free monthly payments for the devices they purchased, but they were, nevertheless, charged interest.
Goldman Sachs did not effectively communicate to consumers how refunds would work either, meaning some consumers had to pay additional interest charges. This also affected credit reports as a result of this miscommunication.
Nick Carcaterra, vice president of Goldman Sachs corporate communications, said, “Apple Card is one of the most consumer-friendly credit cards that has ever been offered. We worked diligently to address certain technological and operational challenges that we experienced after launch and have already handled them with impacted customers.”
He added, “We are pleased to have reached a resolution with the CFPB and are proud to have developed such an innovative and award-winning product alongside Apple.”
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