Apple CEO Tim Cook introduces the Apple Card during a launch event at Apple headquarters in Cupertino, California, on March 25, 2019.
Noah Berger | AFP | Getty Images
The Consumer Financial Protection Bureau has ordered Apple And Goldman Sachs to pay more than $89 million on Wednesday for mishandling consumer disputes involving Apple Card transactions.
The agency said Apple has failed to send tens of thousands of consumer disputes to Goldman Sachs. Even as Goldman Sachs received litigation, the CFPB said the bank did not follow federal requirements in investigating the cases.
Goldman Sachs was ordered to pay a civil penalty of $45 million and $19.8 million in damages, while Apple was fined $25 million. The agency also banned Goldman Sachs from launching new credit cards unless it could come up with an adequate plan to comply with the law.
“Apple and Goldman Sachs have illegally circumvented their legal obligations to Apple Card borrowers. Big Tech companies and major Wall Street firms should not behave as if they are exempt from federal law,” said CFPB Director Rohit Chopra.
Apple Card was first launched in 2019 as an alternative to credit cards, based on Apple Pay, the company’s mobile payment and digital wallet service. The company partnered with Goldman Sachs as the issuing bank and advertised the card as simpler and more transparent than other credit cards.
In December, the companies launched a new feature that allowed users to finance select Apple devices with the card through interest-free monthly installments.
But the CFPB found that Apple and Goldman Sachs misled consumers about the interest-free payment plans for Apple devices. Although many customers thought they would automatically receive interest-free monthly payments when they purchased Apple devices with an Apple Card, they were still charged interest. Goldman Sachs did not adequately communicate with consumers about how the refunds would work, leading some people to end up paying additional interest charges, the CFPB said.
It also meant some consumers had incorrect credit reports, the agency said.
“Apple Card is one of the most consumer-friendly credit cards ever offered. We have worked hard to address certain technology and operational challenges we encountered post-launch and have already addressed them with affected customers,” said Nick Carcaterra, Vice President president of Goldman Sachs corporate communications, told CNBC. “We are pleased to have reached a resolution with the CFPB and are proud to have teamed up with Apple to develop such an innovative and award-winning product.”
Apple said it was working closely with Goldman Sachs to address the issues when it learned about them.
“While we strongly disagree with the CFPB’s characterization of Apple’s conduct, we have reached an agreement with them,” an Apple spokesperson said. “We look forward to continuing to provide a great experience for our Apple Card customers.”
— CNBC’s Hugh Son and Steve Kovach contributed to this report.