Federal regulators have ordered Apple and Goldman Sachs to pay combined penalties of more than $89 million in connection with mismanagement in their Apple Card credit-card business. The Consumer Financial Protection Bureau (C.F.P.B.) issued the penalties following a yearslong investigation into how the two companies handled fraud, customer disputes, and refunds.
The C.F.P.B. fined Goldman Sachs $45 million and imposed a $25 million penalty on Apple. Additionally, Goldman is required to pay over $19.8 million in refunds to impacted customers. The investigation revealed systemic issues in how the companies handled customer disputes, leading to incorrect credit reports and unresolved charge issues for hundreds of thousands of Apple Card users. According to the C.F.P.B., the companies also misled customers about interest-free payment options for Apple products, charging significant interest despite promoting interest-free financing.
Mismanagement and Fines
The C.F.P.B.’s investigation focused on Goldman Sachs’ customer-service practices and uncovered failures to investigate and resolve customer complaints in a timely manner, particularly regarding fraud claims and billing disputes. C.F.P.B. Director Rohit Chopra highlighted these issues in a statement, emphasizing the companies’ failure to adhere to federal regulations. Goldman Sachs’ customer service, which managed the Apple Card, reportedly neglected to act on disputes, leading to further complications for consumers.
Beyond fines, regulators imposed additional restrictions on Goldman Sachs, preventing the bank from launching any new credit card products unless it presents a credible plan that meets legal standards. This reflects growing concerns about Goldman Sachs’ ability to comply with consumer protection laws in its credit card operations.
Apple and Goldman Sachs have responded to the penalties, both acknowledging past mistakes but asserting they have taken steps to address the problems. Nick Carcaterra, a Goldman Sachs spokesperson, defended the Apple Card, calling it “one of the most consumer-friendly credit cards” and emphasized that the company had worked to resolve technological and operational challenges. Apple, while disagreeing with the C.F.P.B.’s characterization of its conduct, has also reached a resolution with the agency.
Broader Impact and Financial Outlook
While Goldman Sachs faces a $45 million fine, the amount is small compared to its overall financial performance. The bank recently reported $3 billion in profits for the third quarter of 2024 and nearly $13 billion in revenue, surpassing analyst expectations. However, Goldman has acknowledged the ongoing challenges within its consumer banking sector, which includes the Apple Card.
Goldman’s consumer-banking business has been under scrutiny since last year, with regulators investigating its handling of billing disputes, credit reporting practices, and customer refunds. Other federal agencies have since joined in these investigations. Moreover, Goldman recently sold its General Motors-branded credit cards to Barclays, taking a $415 million hit, and indicated that it plans to exit its partnership with Apple in the future, which could result in further financial losses.
Some internal reports suggest Goldman executives have privately blamed Apple for the regulatory challenges. The companies’ unique billing structure, which sends cardholders bills at the start of each month instead of on a rolling basis, has allegedly overwhelmed Goldman’s customer service operations. The Apple Card, launched as a consumer-friendly product, is now at the center of ongoing regulatory scrutiny and financial penalties.
