Apple and its partner Goldman Sachs have come under scrutiny from federal regulators for mishandling Apple Card transactions and misleading customers through their marketing efforts.
Initially launched in 2019 with a vision of helping users improve their financial well-being, Apple Card has now become the focus of an investigation by the Consumer Financial Protection Bureau (CFPB), which found that the companies’ practices caused significant harm to cardholders.
According to the CFPB, Apple and Goldman Sachs failed to properly handle customer disputes over charges, leading to inaccurate credit reports and wrongful financial responsibility for many users. The investigation revealed that Goldman Sachs often neglected to investigate transaction disputes forwarded by Apple, further compounding the issues. Customers who believed they would benefit from interest-free financing on Apple products were instead charged interest, a violation of their expectations and the companies' advertised promises.
The violations uncovered in the investigation, which include breaches of the Consumer Financial Protection Act and the Truth in Lending Act, resulted in the CFPB ordering Apple and Goldman Sachs to pay a combined $89 million in penalties and customer redress. Goldman Sachs was hit with a $45 million fine and an additional $20 million to compensate affected cardholders, while Apple was fined $25 million. The agency also prohibited Goldman Sachs from launching new credit cards without providing a compliant operational plan.
The CFPB criticized the companies for launching Apple Card without fully addressing key operational challenges, which ultimately impacted users. The rushed rollout left consumers vulnerable to faulty transaction processing, incorrect credit reporting, and misleading marketing that led to unexpected interest charges.
In response, both Apple and Goldman Sachs acknowledged the issues but defended their product. Goldman Sachs stated that it had worked diligently to resolve the operational issues and expressed satisfaction with the resolution. Apple, while disputing the CFPB's characterization of its role, also affirmed that it had collaborated with Goldman to fix the problems and improve the customer experience.
As Apple continues to evolve its financial services, the company is reportedly exploring partnerships with other banks to take over its credit card program, signaling a potential shift away from Goldman Sachs in the future.
