Photo: Quantumquark
Here’s another case when a new financial product wasn’t ready for consumer rollout. Also, another cautionary tale about doing business with a big bank.
Apple and Goldman Sachs are being fined for customer service breakdowns and misrepresentations that impacted hundreds of thousands of Apple Card users.
Apple failed to send tens of thousands of consumer disputes of Apple Card transactions to Goldman Sachs, and when Apple did send disputes to the bank, it didn’t follow federal requirements for investigating the disputes, the Consumer Financial Protection Bureau said in a statement.
Apple and Goldman launched Apple Card despite third-party warnings to Goldman that the Apple Card disputes system wasn’t ready due to technological issues, the CFPB said. 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 agency is ordering Goldman Sachs to pay $19.8 million to consumers and a $45 million penalty, and Apple to pay a $25 million 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 c omply with the law.
The CFPB also found that Apple and Goldman Sachs misled consumers about interest-free payment plans for Apple devices. Many customers thought they’d automatically get interest-free monthly payments when buying Apple devices with their Apple Card. Instead, they were charged interest. In some cases, Apple didn’t show the interest-free payment option on its website on certain browsers. Goldman Sachs also misled consumers about the application of some refunds, which led to consumers paying additional interest charges.
“Apple and Goldman Sachs illegally sidestepped their legal obligations for Apple Card borrowers,” said CFPB Director Rohit Chopra. “Big Tech companies and big Wall Street firms should not behave as if they are exempt from federal law.”
Goldman Sachs Group Inc. mainly focuses on investment banking and investment management, not consumer finance. Apple Card was Goldman Sachs’s first large experiment in credit card lending.
Apple Inc. entered the financial services market in 2014 and has offered several consumer financial products, including Apple Pay, a mobile payment system and digital wallet service; Apple Cash, a digital debit card allowing for peer-to-peer payments; Apple Pay Later, a buy now, pay later product; and Apple Card, the company’s first credit card.
Consumers can submit complaints about financial products and services by visiting the CFPB’s website or by calling 855-411-2372.
