The Consumer Financial Protection Bureau has fined Apple and Goldman Sachs £68 million for mishandling customer cases and misleading users of the Apple Card. The investigation found that Apple failed to forward many customer issues to Goldman Sachs, which led to delays and legal violations. Even when Goldman Sachs received cases, it did not meet federal standards for following up on them.
These failures caused serious problems for customers, some of whom were left with incorrect credit records and overdue payments they had tried to challenge. The CFPB also discovered that Apple and Goldman misled users about a zero-interest plan for Apple products. Many customers expected to make payments without interest, but they were charged anyway due to poor communication and lack of clarity.
The companies were warned about the system’s flaws before the card was launched, but they chose to move forward. These decisions caused frustration for thousands of customers and have now resulted in regulatory penalties.
How Were Customers Affected?
Customers trying to report issues through Apple’s Wallet app faced barriers. In some cases, their submissions were not passed on to Goldman Sachs, leaving payments unexamined. This meant customers were unfairly held accountable for errors or fraudulent activity on their accounts.
Confusion around the zero-interest payment plan also became a serious problem. Many believed that using the Apple Card would automatically give them interest-free instalments for Apple products. Instead, some were surprised to see interest charges, which happened because the correct payment option was not always visible. Apple only showed the option to users on its Safari browser, further complicating the process.
Refunds also became a source of frustration. Goldman Sachs misapplied them between different balances, causing some users to pay unexpected interest. These issues added to the difficulties experienced by many Apple Card holders, leading to regulatory action from the CFPB.
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What Penalties Were Given?
Apple has been ordered to pay a £19 million fine, which will go into a relief fund for affected customers. Goldman Sachs will reimburse customers at least £15.5 million and pay an additional £34 million civil penalty. On top of that, the CFPB has blocked Goldman Sachs from launching any new credit cards until it demonstrates compliance with federal laws.
“Apple and Goldman Sachs illegally sidestepped their legal obligations for Appl Card borrowers. Big Tech companies and big Wall Street firms should not behave as if they are exempt from federal law. The CFPB is banning Goldman Sachs from offering a new consumer credit card unless it can demonstrate that it can actually follow the law,” said Rohit Chopra CFPB’s Director.
These fines come at a time when Goldman Sachs is reconsidering its focus on consumer finance. The Apple Card was meant to be a way for the investment bank to expand into personal lending, but the project has been challenging. Apple hoped the card would encourage sales of its devices, but instead, both companies have faced backlash.
This partnership is now under serious review, with Apple reportedly exploring new management options. The difficulties faced during the launch and operation of the Apple Card have seriously put a strain on the relationship between the two companies. More as the case unfolds.
