Apple and Goldman Sachs ordered to pay $89 million over Apple Card outages

When Apple announced the launch of the Apple Card in 2019, it promised “a new kind of credit card” “designed to help customers lead healthier financial lives.”

Now, government regulators say Apple and its partner Goldman Sachs have harmed hundreds of thousands of cardholders by mishandling disputed transactions and using deceptive marketing practices.

The Consumer Financial Protection Bureau, a federal agency, ordered the companies to pay a total of $89 million in penalties and reparations to those affected. The CFPB also barred Goldman Sachs from launching a new credit card unless it provides “a credible plan” that the product will comply with the law.

“The companies violated consumer financial protection laws through their practices related to Apple Card,” CFPB Director Rohit Chopra said in prepared remarks Wednesday. “This has led to unwarranted charges, mishandled litigation and damaged credit reports. »

The CFPB says the companies harmed consumers by failing to process disputed transactions, meaning cardholders were unfairly held responsible for fees.

Goldman often failed to investigate disputes sent by Apple, damaging cardholders’ credit reports, according to the agency. The companies also marketed interest-free financing if people used the card to buy Apple devices, but many cardholders who expected to be automatically enrolled were charged interest.

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An investigation by the CFPB found violations of the Consumer Financial Protection Act and the Truth in Lending Act.

“These failures are not mere technicalities,” Chopra added. “They caused real harm to real people.”

The CFPB fined Goldman $45 million and ordered it to pay $20 million in restitution to customers. Meanwhile, Apple was fined $25 million.

When it launched, Apple Card represented a new breakthrough in consumer credit for both the tech giant and the Wall Street giant. But the CFPB describes a rush to launch the card despite a series of problems that ultimately harmed users.

In statements to NPR, Apple and Goldman Sachs defend the card as consumer-friendly.

“We have worked diligently to address certain technological and operational challenges we encountered post-launch and have already addressed them with affected clients,” said Nick Carcaterra, a Goldman Sachs spokesperson, adding that the firm was pleased to reach a resolution with the CFPB.

Apple said it worked closely with Goldman Sachs to resolve issues and help customers.

“While we strongly disagree with the CFPB’s characterization of Apple’s behavior, we have aligned ourselves with an agreement with them. We look forward to continuing to deliver a great experience for our Apple Card customers,” said an Apple spokesperson.

Apple is reportedly in talks with other banks to take over its credit card program from Goldman Sachs.

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