William Gallagher
The Consumer Financial Protection Bureau has ruled that Apple was not ready for Apple Card disputes, and tens of thousands were then not dealt with properly by Goldman Sachs.
Credit firm Goldman Sachs was already losing millions over Apple Card, and is certain to take a hit of a few more millions when it finally gets out of its unhappy marriage with Apple. But now it is also being hit with penalties — and Goldman Sachs is no longer allowed to launch new any new credit card.
The Consumer Financial Protection Bureau (CFPB) has announced that together Apple and Goldman Sachs over issues it says affected hundreds of thousands of Apple Card customers. Specifically, Apple failed to send the details of tens of thousands of disputed transactions to Goldman Sachs — and then the finance firm failed to follow federal investigation requirements.
"Apple and Goldman Sachs illegally sidestepped their legal obligations for Apple Card borrowers. Big Tech companies and big Wall Street firms should not behave as if they are exempt from federal law," said CFPB Director Rohit Chopra. "The CFPB is banning Goldman Sachs from offering a new consumer credit card unless it can demonstrate that it can actually follow the law."
Reportedly, consumers faced long waits for disputed charges to be refunded, and some of them had their credit status affected. The CFPB notes that third parties had warned Goldman Sachs ahead of the launch that Apple's dispute systems were inadequate.
Apple's systems were sufficiently inadequate that users were not always shown an interest-free payment option when one was available. This led, says the CFPB, to Apple effectively misleading customers who believed they would automatically get interest-free payment plans, and so had charges imposted.
Given that Goldman Sachs ignored the warnings and also in particular because it did not follow federal rules over disputes, the CFPB has banned the finance firm from launch any new credit card. It will lift that ban, though, if Goldman Sachs can provide a credible plan that it will comply with the law.
Goldman Sachs must pay at least $19.8 million in redress, and also a $45 million civil money penalty.
Apple itself is not off the hook. The company must pay a $25 million civil penalty.
Goldman Sachs already regretted consumer credit partnerships
The ban on launching a new credit card is an embarrassment for Goldman Sachs, but probably not a difficulty. The ban is specifically against consumer credit cards, and Goldman Sachs has been working to get out of the consumer business entirely.
Goldman Sachs invested heavily in consumer products, and not only with Apple. It had a similar partnership with General Motors, and is currently in the process of dissolving the partnership with GM.
On Apple's part, the Apple Card program has failed to expand overseas despite Tim Cook's own commitment to expansion at launch in 2019. Apple did, however, expand its partnership with Goldman Sachs in order to launch Apple Savings in 2023.
However, Apple Savings and Apple Card have reportedly been an expensive failure for Goldman Sachs. One Goldman Sachs executive is said to have commented that "we should never have done this f****** thing."
Neither Apple nor Goldman Sachs have yet commented on the CFPB's conclusions.
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10 Comments
Good for the CFPB the fine is justly assigned.
While I wasn't the victim of fraud I have certainly suffered poor customer service using Apple Card.
I made two small transactions when I got my card (September 2019) and when I tried to pay, the app was unable to process my linked checking account (the same one I use to pay off other cards, my property tax bill, healthcare premiums, utilities, etc.). Ultimately I ended up on a 45+ minute phone call with Goldman Sucks customer service which included me verbally reciting my bank's routing and account number to pay off the balance due. I have never had to do that before in three plus decades of owning credit cards.
I ended up with an Apple Cash Rewards balance of $0.15. I never made a single transaction after.
Then a year ago Goldman Sucks cancelled my Apple Card yet left my account open. And then bizarrely they started snail mailing monthly statements. God knows what it costs to do this but paper, printing, envelopes and postage aren't free.
Obviously I am not the only person who has received poor customer service from Goldman Sucks and the CFPB's findings uncovered even worse transgressions. This is why we have consumer protection laws.
Shame on Apple for picking such a poor financial institution as a partner. It's no surprise that Goldman Sucks is in the midst of exiting the entire consumer finance business.
Of course no financial institution is perfect, they have all made mistakes. Well, some mistakes aren't free. There are regulations that prevent banks from being slobs.
The rest of the consumer finance world (and not just US domestic) is probably well aware of Apple and Goldman Sucks' struggles. It may be a contributor as to why Apple Card -- after five years -- is still a US-only service. No other bank in the world has agreed to partner with Apple to bring Apple Card to their market.
Anyhow, I look forward to receiving my next mailed paper statement from GS in a couple of weeks. Keep draining your bank account sending me deadtrees documents. Loving it!
Some things look like just plain bad service, but not passing on an incomplete form? Get out of here!
I wouldn't buy a computer from Visa... and no-one should have tried an Apple credit card. I knew better...