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Apple, Goldman Sachs fined over $89 million for Apple card failures

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3 hours ago

October 23, 2024

Business Finance News

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 ordered Apple and Goldman Sachs on Wednesday to pay more than $89 million for mishandling consumer disputes related to Apple Card transactions.

The bureau said Apple failed to send tens of thousands of consumer disputes to Goldman Sachs. Even when Goldman Sachs did receive disputes, the CFPB said the bank did not follow federal requirements when investigating the cases.

Goldman Sachs was ordered to pay a $45 million civil penalty and $19.8 million in redress, while Apple was fined $25 million. The bureau also banned Goldman Sachs from launching new credit cards unless it can provide an adequate plan to comply with the law.

“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,” said CFPB director Rohit Chopra.

Apple Card was first launched in 2019 as a credit card alternative, hinged on Apple Pay, the company’s mobile payment and digital wallet service. The company partnered with Goldman Sachs as its issuing bank, and advertised the card as more simple and transparent than other credit cards.

That December, the companies launched a new feature that allowed users to finance certain 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. While many customers thought they would get automatic interest-free monthly payments when they bought Apple devices with an Apple Card, they were still charged interest. Goldman Sachs did not adequately communicate to consumers about how the refunds would work, which meant some people ended up paying additional interest charges, according to the CFPB.

It also meant some consumers had incorrect credit reports, the agency said.

“Apple Card is one of the most consumer-friendly credit cards that has ever been offered. We worked diligently to address certain technological and operational challenges that we experienced after launch and have already handled them with impacted customers,” Nick Carcaterra, vice president of Goldman Sachs corporate communications, told CNBC. “We are pleased to have reached a resolution with the CFPB and are proud to have developed such an innovative and award-winning product alongside Apple.”

Representatives from Apple did not immediately respond to CNBC’s request for comment.

— CNBC’s Hugh Son contributed to this report.

Finance

Watch CFPB Director Rohit Chopra speak at DC Fintech Week

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3 hours ago

October 23, 2024

Business Finance News

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Rohit Chopra, director of the Consumer Financial Protection Bureau, will speak Wednesday at DC Fintech Week in Washington, D.C.

The bureau finalized its personal financial data rights rule on Tuesday, a measure that would require financial services firms to unlock an individual’s personal financial data and then transfer it for free to another provider at the request of the customer.

The rule would apply to data associated with a range of products, spanning from bank accounts and credit cards to payment apps and mobile wallets. The bureau said it would also allow customers to comparison shop more easily for favorable rates on deposits or credit.

“By allowing consumers to permission their personal financial data, and make it over time more seamless, people can more easily sign up, switch accounts, and take their financial history with them,” Chopra said Tuesday in prepared remarks at the Federal Reserve Bank of Philadelphia.

The CFPB’s new rule garnered mixed reviews from trade groups. The American Bankers Association raised concerns around data security, while the Financial Technology Association – whose members include Plaid and PayPal – said the regulation “will increase competition, improve consumers’ choices, and drive momentum for future innovations that benefit customers.”