The volatile relationship between Apple and Goldman Sachs has not done either entity any favors, even though their partnership resulted in the inception of the Apple Card. A government agency believes there was an influx of unresolved customer disputes because the technology giant failed to send them to its banking partner. When those disputes were sent, Goldman Sachs did not follow the recommended requirements to investigate them. In short, the technological issues that came with the Apple Card, followed by the negligence of both companies, have forced the Consumer Financial Protection Bureau (CFPB) to issue a cumulative penalty of over $90 million.
Customers were reportedly waiting significantly long periods for their dispute charges to be refunded, resulting in their credit scores being negatively affected
The government agency has put out a statement below, mentioning that third parties had warned Goldman Sachs ahead of the Apple Card launch that the technological infrastructure to tackle the disputes was insufficient. Given that Apple sells millions of devices in the U.S. alone, it was only a matter of time before the Apple Card was driven daily by thousands, and that is where the problem manifested. Additionally, the Cupertino firm was called out by CFPB, saying that it misled customers into believing that they got interest-free payment plans.
“Today, the Consumer Financial Protection Bureau (CFPB) took action against Apple and Goldman Sachs for customer service breakdowns and misrepresentations that impacted hundreds of thousands of Apple Card users. The CFPB found that Apple failed to send tens of thousands of consumer disputes of Apple Card transactions to Goldman Sachs, and when Apple did send disputes to Goldman Sachs, the bank did not follow numerous federal requirements for investigating the disputes.
Apple and Goldman launched Apple Card despite third-party warnings to Goldman that the Apple Card disputes system was not ready due to technological issues. These failures meant that consumers faced long waits to get money back for disputed charges, and some had incorrect negative information added to their credit reports.
The CFPB is ordering Goldman Sachs to pay at least $19.8 million in redress and a $45 million civil money penalty, and Apple to pay a $25 million civil money penalty. The CFPB is also banning Goldman Sachs from launching a new credit card unless it can provide a credible plan that the product will actually comply with the law.”
A Goldman Sachs executive was previously reported to have regretted the decision to launch the Apple Card, as the financial institution was estimated to have suffered a mammoth $1.2 billion loss in 2022 by spending around $350 to acquire each customer. Goldman Sachs will eventually separate itself from Apple, and the word around the street is that JPMorgan Chase will fill the gap, but there will be various conditions involved, such as paying less than the $17 billion full face value of Apple Card cardholders in outstanding balances. Apple and Goldman Sachs have yet to comment on CFPB’s statements or the fine issued, but we will have future updates ready for you.
News Source: CFPB
