CFPB Levies Significant Penalties Against Apple and Goldman Sachs Over Apple Card Mismanagement

Consumer Financial Protection Bureau Requests Information on the Impact of the CARD Act Regulations on Small Entities and the Consumer Credit Card Market

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has taken action against Apple Inc. and Goldman Sachs for significant missteps in their management of the Apple Card, affecting hundreds of thousands of users. The CFPB’s investigation uncovered severe customer service failures and misrepresentations, resulting in substantial financial penalties for both companies.

The CFPB’s findings revealed that Apple failed to forward tens of thousands of consumer disputes regarding Apple Card transactions to Goldman Sachs. Compounding this issue, when disputes were conveyed, Goldman Sachs frequently neglected to adhere to federal requirements for dispute investigation. This systemic failure led to undue delays in resolving disputes, incorrect negative credit reporting for consumers, and unresolved financial charges.

CFPB Director Rohit Chopra highlighted the gravity of these violations, stating, “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.” The CFPB’s response includes a $19.8 million redress from Goldman Sachs to the affected consumers, alongside a $45 million civil money penalty. Apple faces a $25 million civil money penalty. Additionally, Goldman Sachs is banned from launching any new credit card products without a credible compliance plan to ensure adherence to the law.

A critical component of the CFPB’s case was the misleading marketing of the Apple Card’s interest-free payment plans for Apple devices. Many consumers were led to believe they would automatically receive interest-free financing when purchasing Apple products with their Apple Card. However, due to deceptive practices, interest was charged in numerous cases, and many consumers were unaware of their enrollment status in these plans.

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The CFPB also found that Goldman Sachs misled cardholders regarding the application of refunds, which resulted in additional interest charges. This misapplication of refunds affected thousands of cardholders, exacerbating the financial strain on those expecting interest-free transactions.

The enforcement action underscores the CFPB’s broader commitment to holding large corporations accountable for compliance with federal consumer financial laws. As Director Chopra remarked, the case illustrates that even the most influential technology and financial entities must meet their legal responsibilities to consumers.

The Apple Card, introduced in August 2019, marked a significant foray into consumer finance for both Apple and Goldman Sachs. Despite warnings about readiness issues, both companies proceeded with the launch, driven partly by contractual obligations and strategic ambitions.

This enforcement action by the CFPB not only aims to rectify past consumer harms but also to prevent future violations. The bureau remains vigilant in its oversight of technological and financial service providers, ensuring that consumer protection standards are upheld amidst the evolving landscape of digital finance.

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