Credit Card: Regulators fine Apple, Goldman Sachs $89.8m for poor CRM, misleading marketing

*The US Consumer Financial Protection Bureau orders Goldman Sachs to pay total $64.8 million to affected customers and a fine, slamming $25 million on Apple, while also banning the former from launching a new credit card unless they can prove they will abide by the regulation

Gbenga Kayode | ConsumerConnect

The United States (US) Consumer Financial Protection Bureau (CFPB) has moved against Apple and Goldman Sachs over how the companies failed to handle customer complaints affecting hundreds of thousands of Apple Card users.

ConsumerConnect reports Goldman Sachs is one of the largest financial institutions globally, mostly focusing on investment banking.

Apple Card, created by Apple Incorporated, was its first major step into credit card lending.

It is issued by Goldman Sachs, designed primarily to be used with Apple Pay on an Apple device, such as an iPhone, iPad, Apple Watch, or Mac.

The Card is available only in the United States, with 12 million cardholders as of early 2024, a report said.

Apple, a multinational tech company and one of the global tech giants, began offering financial services in 2014, including Apple Card, which the tech giant launched in partnership with Goldman Sachs in 2019.

The problems with the two companies resulted from customer complaints and apparent confusion about interest-free payments for Apple devices, including the Apple Card, have resulted in big fines for both companies.

The CFPB found that Apple didn’t properly forward tens of thousands of customer complaints about disputed Apple Card transactions to Goldman Sachs for redress. When Apple did send complaints, Goldman Sachs didn’t follow Federal rules for investigating them, agency report said.

It was also gathered that Apple and Goldman Sachs launched the Apple Card even though Goldman Sachs had been warned about technical problems with the system.

Subsequently, several consumers had to wait a long time to get their money back for disputed charges, and some had incorrect negative information added to their credit reports.

The CFPB has ordered Goldman Sachs to pay at least $19.8 million to affected customers and a $45 million fine. Apple is being fined $25 million.

The market regulators are also banning Goldman Sachs from launching a new credit card unless they can prove they will follow the extant law.

On misleading marketing to consumers

The CFPB also uncovered that Apple and Goldman Sachs misled customers about interest-free payment plans for Apple devices.

Several consumers had thought they were automatically getting interest-free payments when using Apple Card to buy Apple devices.

However, they were charged interest in the process. Sometimes, the interest-free option wasn’t even shown on Apple’s Web site, depending on the browser being used, report said.

Aside from these, Goldman Sachs misled some customers about how refunds would be applied, which resulted in extra interest charges, according to report.

Apple, Goldman Sachs broke the law, says CFPB Director

Speaking on the development, CFPB Director Rohit Chopra stated: “Apple and Goldman Sachs broke the law by failing to meet their obligations to Apple Card customers.

“Big Tech and big Wall Street companies must follow the law like everyone else.”

This partnership has helped Apple boost sales of its expensive devices by offering financing options, report noted.

In regard to how Goldman Sachs was warned prior to encountering the problems, report indicated that before the Apple Card launched, Goldman Sachs was cautioned that the system for handling customer complaints was not ready.

Yet, both companies pushed ahead anyway, and that led to serious issues with how customer disputes were handled, such as Apple not passing along some disputes to Goldman Sachs and Goldman Sachs failing to investigate others properly.

Besides, misleading marketing also caused confusion about the interest-free payment plan for Apple devices.

The CFPB, therefore, is holding both companies accountable for their actions by fining them and demanding better practices in the future.

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