Apple and Goldman Sachs fined $89 million for Apple Card issues

The Consumer Financial Protection Bureau (CFPB) has imposed a fine exceeding $89 million on Apple and Goldman Sachs, following a series of failures regarding the Apple Card credit card. This hefty penalty is attributed to inadequate customer service and misleading practices, which have adversely affected hundreds of thousands of users of the Apple Card.

Introduced in the U.S. in 2019, the Apple Card was designed to promote a “healthier financial life,”resulting from a collaboration between Apple, Goldman Sachs, and Mastercard. The credit card operates entirely in a digital format and is managed through the Wallet app available on Apple devices. Additionally, the card offers various incentives, including cashback rewards for purchases made directly from Apple or through Apple Pay.

The recent sanctions will be divided amongst the two companies as follows:

• Goldman Sachs is responsible for at least $19.8 million in restitution
• Goldman Sachs will also face a civil penalty of $45 million
• Apple is subjected to a civil penalty amounting to $25 million

The CFPB indicated several critical failings in its announcement regarding the fines. These include the companies’ inability to effectively handle and communicate consumer disputes, a lack of investigation into cardholder complaints, and the dissemination of misleading information related to a payment plan for purchasing iPhones and other Apple products. While the plan was intended to allow cardholders to buy Apple devices through interest-free installments lasting from six months to two years, many unsuspecting customers ended up incurring interest charges due to not being automatically enrolled as they should have been.

Moreover, the CFPB has issued a “ban”on Goldman Sachs from introducing any new credit cards until it can demonstrate that its products will meet legal standards. Meanwhile, Goldman Sachs is reportedly exploring options to transfer this partnership to other credit card companies, such as American Express, as part of its strategy to reduce its consumer banking operations.

Source