Apple and Goldman Sachs fined for Apple Card-related errors
Apple and Goldman Sachs have been hit with significant fines totalling $89 million due to serious misconduct in the management of the Apple Card. This product, which was created as an innovative step towards connecting technology and financial services, has not only brought both companies profits, but now reputational losses.
The U.S. Consumer Financial Protection Bureau (CFPB) has ruled that due to improper handling of customer disputes and other errors Goldman Sachs $GS has also been temporarily banned from issuing new credit cards.
Apple Card problems
One of the main reasons for the fine was the failure of Apple $AAPL and Goldman Sachs to adequately resolve customer disputes regarding transactions on their Apple Card. The CFPB found that Apple failed to refer thousands of Apple Card disputes to its partner Goldman Sachs, which had a duty to resolve them. When disputes were reported, Goldman Sachs did not comply with federal regulations regarding their investigation. As a result, consumers not only waited a long time to recover money for disputed transactions, but some also faced incorrect information on their credit reports, which could have had serious implications for their financial situation.
Early credit card charge-offs despite warnings
According to the CFPB's statement, Apple and Goldman Sachs launched the Apple Card prematurely despite third-party warnings that the dispute resolution system was not yet fully ready. This premature product launch meant that the technological problems present in the system directly affected consumers.
Customers were incorrectly charged interest
Another problem was misleading customers about their ability to purchase Apple products without interest. The CFPB found that although customers were promised interest-free payment plans, some of these purchases were actually subject to interest. In this way, consumers were misinformed, contributing to further financial losses.
Penalties and temporary ban on new credit card issuance
Goldman Sachs was fined just under $45 million and will have to pay another $20 million directly to affected customers. Apple was fined $25 million. In addition, the CFPB has decided to temporarily ban Goldman Sachs from issuing new credit cards until it can present a credible plan to ensure that the new products are compliant.
Damage to the reputation of both companies
The case is another major blow to the reputation of Goldman Sachs, which has faced problems in its consumer division in recent years. For example, their credit card issuing partnership with General Motors, which was taken over by Barclays, ended in 2023. Apple, which entered the financial market with big ambitions, is now facing criticism for its partnership with a financial institution that has been unable to ensure credit products work properly.
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