Apple, Goldman Sachs fined $89M for misleading Apple Card users
The Consumer Financial Protection Bureau (CFPB) has fined tech giant Apple and financial institution Goldman Sachs a whopping $89 million. The fines were imposed for "illegally mishandling transaction disputes and misleading iPhone purchasers about interest-free payment options" in connection with the Apple Card. The CFPB stated that these problems impacted "hundreds of thousands of Apple Card users."
Dispute resolution and interest charges under scrutiny
The CFPB alleges that Apple did not forward "tens of thousands" of Apple Card transaction disputes to Goldman Sachs. Further, the latter is accused of not timely investigating the disputes it did receive, which is a violation of federal law. The bureau also found that cardholders were mistakenly misled to believe they would automatically get interest-free financing for Apple device purchases made using the Apple Card.
Apple's online shopping experience under fire
The CFPB emphasized that many cardholders were unknowingly charged interest because they weren't automatically enrolled for interest-free financing as expected. The problem was especially common among online shoppers, where Apple only showed the interest-free financing option in its Safari browser. The bureau has ordered Apple to pay a $25 million civil money penalty, which will go into the CFPB's victims relief fund.
Goldman Sachs's penalties and future restrictions
Goldman Sachs has been ordered to pay "at least" $19.8 million in redress, along with a $45 million civil money penalty. The financial institution is also barred from launching any future credit card products until it presents the CFPB with "a credible plan for how the product will comply with the law." This measure ensures any new offerings from Goldman Sachs meet legal standards and protect consumers' interests.
Apple and Goldman Sachs respond to allegations
Responding to the allegations, Goldman Sachs's Nick Carcaterra said, "Apple Card is one of the most consumer-friendly credit cards that has ever been offered." He said they have worked hard to address some technological and operational challenges seen after launch. Apple also released a statement saying it is committed to providing consumers with fair and transparent financial products. The company highlighted its commitment toward supporting users' financial health through the Apple Card.
Apple's future plans for Apple Card
Reports indicate that Apple is looking to end its partnership with Goldman Sachs for running the Apple Card. The tech giant has reportedly been in talks with JPMorgan about possibly taking over the role. The move comes as part of a wider shift in strategy after the CFPB's allegations and subsequent penalties on both companies.
