CFPB Hands Apple, Goldman Sach $90 Million Penalty Over Misleading Apple Card

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The Apple Card, introduced in 2019 as a partnership between Apple and Goldman Sachs, promised a seamless and customer-friendly credit experience. However, the Consumer Financial Protection Bureau (CFPB) recently imposed significant penalties totaling over $89 million against both Apple and Goldman Sachs. The penaltiies were a mix of fines and refunds due to multiple failures in how they handled customer disputes and refunds.

Apple Card's Missteps and Failures

The Apple Card was marketed as a more straightforward and transparent credit card, tied closely to Apple Pay. It offered users easy payment options, including interest-free financing for Apple devices. But the venture soon ran into trouble. According to federal regulators, Apple failed to send tens of thousands of disputes from customers to Goldman Sachs. This led to unresolved issues for many cardholders, including some left responsible for fraudulent transactions or stuck with incorrect negative information on their credit reports.

For its part, Goldman Sachs mishandled the disputes it did receive. The bank did not always send acknowledgment or resolution letters or conduct proper investigations, as required by federal law. These lapses harmed customers, many of whom faced delays in refunds and adverse credit impacts.

Customer Grievances Against Apple Card

The CFPB found that Apple and Goldman Sachs misled consumers in several ways. Many customers believed they would automatically qualify for interest-free monthly payments when purchasing Apple products using the Apple Card. However, this was not always the case. Customers using certain browsers, like Chrome or Firefox, weren't presented with the interest-free option, leading to unexpected interest charges.

Additionally, Goldman Sachs misapplied refunds, leading to further customer frustration. Instead of applying refunds to interest-bearing balances, they were often used to offset the interest-free Apple device payment plan. This confusion resulted in higher interest payments for many cardholders.

Regulatory Action and Goldman Sachs' Compliance Issues

As a result of these failures, the CFPB levied significant penalties: a $25 million fine for Apple, a $45 million penalty for Goldman Sachs, and $19.8 million in customer refunds. Beyond the financial penalties, the bureau has banned Goldman Sachs from launching new credit card products until the bank can demonstrate compliance with consumer protection laws.

This ruling is a significant setback for Goldman Sachs, which had hoped to expand its consumer finance footprint with the Apple Card venture. The bank must now prove that it can properly handle customer disputes and refunds before it can launch any new credit card offerings.

Looking Forward: Can Apple and Goldman Sachs Recover?

Both companies have voiced their disagreement with the CFPB's findings. Apple has stated that it worked closely with Goldman Sachs to resolve these issues as soon as they were identified, and Goldman Sachs has expressed pride in the innovative Apple Card product. However, this regulatory decision raises questions about whether the companies can fully recover the trust of their customers and avoid similar problems in the future.

Did you avail of an Apple card? How was it compared to other payment systems? Tell us what you think!

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