The CFPB claims that Apple and Goldman Sachs were both aware that the Apple Card was “not fully ready” due to technological issues, but they still went ahead with the launch.
Goldman Sachs and Apple are now faced with a hefty penalty over issues with the Apple Card. The Consumer Finance Protection Bureau (CFPB) accused the two companies of deceiving customers with the specifics of the credit card, indicating there were serious issues of “customer service breakdowns and misrepresentations.”
Apple and Goldman Sachs have to pay a combined $89 million fine to address the matter. The issues with the card have affected thousands of customers, and despite knowing about the problem, the companies both failed to take sufficient action to put the matter to rest.
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The Goldman Sachs-Apple Penalty Raises Issues with the Apple Card
Apple and Goldman Sachs entered a partnership in August 2019, introducing the Apple credit card to allow customers of the iPhone company to finance payments through an internal system. This Apple card was aimed at incentivizing customers to spend more on the company’s products by making transactions via the card.
According to the CFPB, Apple and Goldman Sachs mishandled innumerable consumer disputes that were filed in relation to transactions detected on the cards. Apple failed to send “tens of thousands” of related consumer disputes on the card to the bank. When it did manage to send them to Goldman Sachs, the bank failed to adhere to the federal regulations involved in investigating these disputes.
After customers disputed the transactions, the bank was expected to conduct an inquiry into the issue and clarify the root of the problem at once, but Goldman Sachs did not stick to the procedure.
It is reported that Apple and Goldman Sachs were both warned by third parties that the Apple Card was not technically efficient enough to launch, but the companies decided to go ahead with the release of the card. They did not fix the system following its release either. This left consumers with extremely long waits to hear back on the results of their disputed charges, and many were also left with incorrect negative information on their credit reports.
Apple and Goldman Sachs’ mishandling of the card is only one part of the problem. The companies were also accused of misleading customers.
The Apple Card’s Failures Include Lack of Clarity on “Interest-Free” Payments
The report on the Goldman Sachs and Apple penalty states that the two businesses misled customers with regard to interest-free payment plans on purchases of Apple products. Customers believed that they would be able to automatically get interest-free monthly payments if they used the card to buy an Apple product, but this was not the case as they were still charged interest.
For some customers, the interest-free payment option was not even visible on certain browsers, which added to their confusion on how to proceed. In addition to these issues, Goldman Sachs is also said to have misled consumers about the application of refunds, and as a result, some customers found themselves paying additional interest charges.
CFPB claims that Apple’s “deceptive marketing materials and illegal conduct” were the source of the confusion. The penalty against Goldman Sachs and Apple is set at $89 million, but it isn’t divided equally. Goldman Sachs is expected to pay at least $19.8 million in redress and a $45 million civil money penalty. Apple, on the other hand, will pay a $25 million civil money penalty to the CFPB’s victim relief fund.
In addition to the fines set on the failure of the Apple Card, Goldman Sachs is no longer allowed to launch a new credit card until it can submit a stable plan for its next venture. “The CFPB is banning Goldman Sachs from offering a new consumer credit card unless it can demonstrate that it can actually follow the law,” CFPB Director Rohit Chopra explained.
