Goldman Sachs and Apple Settle Apple Card Misconduct Claims for $89 Million
In a major blow to Goldman Sachs and Apple, the two companies will pay a combined $89 million to settle accusations of misleading customers and mishandling disputes related to their Apple Card joint venture. The Consumer Financial Protection Bureau (CFPB) launched a long-running investigation into the companies’ practices, ultimately finding that both had violated consumer protection laws.
The CFPB’s investigation revealed a series of troubling issues. Apple, it was found, failed to send tens of thousands of customer dispute requests related to Apple Card transactions to Goldman Sachs. When disputes were sent, Goldman Sachs didn’t adhere to federal requirements for investigating the disputes, further compounding the problem.
The investigation also uncovered deceptive practices related to interest-free payment plans for Apple devices. Many customers mistakenly believed they would automatically receive interest-free monthly payments on Apple product purchases, only to discover that they were charged interest. This misrepresentation was a key factor in the CFPB’s decision to impose penalties.
Financial Penalties and Restrictions
As a result of these findings, the CFPB has ordered Goldman Sachs to pay at least $19.8 million in redress to affected customers and a $45 million penalty. Apple will also pay a $25 million penalty. The CFPB has also placed a significant restriction on Goldman Sachs, prohibiting them from launching a new credit card without first presenting a “credible plan” that ensures the product’s compliance with consumer protection laws.
CFPB Director Rohit Chopra
emphasized the seriousness of the findings, stating that “Big Tech companies and big Wall Street firms should not behave as if they are exempt from federal law.” He also highlighted the CFPB’s commitment to holding these companies accountable for their actions.Goldman Sachs and Apple Respond
Goldman Sachs acknowledged the operational challenges experienced after the Apple Card’s launch, stating that they have addressed these issues and already compensated affected customers. Apple, while disagreeing with the CFPB’s characterization of their conduct, also stated that they have reached an agreement with the agency.
Background of the Apple Card Partnership
The partnership between Goldman Sachs and Apple, established in 2019, has been plagued by problems since its inception. Goldman Sachs has faced accusations of bias in its credit scoring algorithms and has been subject to scrutiny from regulatory bodies over its handling of consumer disputes.
This settlement underscores the growing scrutiny of big tech companies’ financial practices and their potential impact on consumers. The CFPB’s actions send a clear message that even the largest corporations are not above the law and that the agency will aggressively pursue companies that engage in unfair or deceptive practices.
This case is a significant development in the ongoing conversation about consumer protection in the digital age. It will likely have a ripple effect across the industry, encouraging other companies to closely examine their practices and ensure compliance with federal regulations.