Apple and Goldman Sachs must pay nearly $90 million over mishandling of credit-card business

Federal regulators ordered Goldman Sachs and Apple on Wednesday to pay combined penalties of more than $89 million over their handling of their credit-card business, affecting hundreds of thousands of Apple Card users.

The investment bank was ordered by the Consumer Financial Protection Bureau to pay fines of $45 million, and Apple was fined $25 million. In addition, Goldman will be required to pay at least $19.8 million in customer refunds. Regulators are barring Goldman from offering any new credit card other than the Apple Card unless it provides a “credible plan” showing the product will comply with the law.

The CFPB’s yearslong inquiry looked into, among other issues, Goldman’s customer-service operations, specifically how the bank handled fraud and refunds in its credit-card partnership with Apple. The investigation found that the companies’ conduct left customers with incorrect credit reports and unresolved charge disputes.

Apple and Goldman failed to properly handle customer disputes, Rohit Chopra, the CFPB’s director, said on a call with reporters Wednesday. Even when Goldman was alerted to disputes, Chopra added, the bank often failed to follow federal requirements to investigate and resolve them in a timely manner.

The agency also said Goldman and Apple misled consumers about interest-free payment options for Apple devices, charging substantial interest despite leading customers to believe they would get interest-free financing when purchasing Apple products with their Apple Card.

“The execution was a mess,” Chopra said, referring to the launch of the credit-card partnership in 2019.

“Key systems related to Apple Card weren’t ready,” he said. “Goldman Sachs’ board was even told about the problems, but it made the business decision to go forward anyway.”

Nick Carcaterra, a spokesperson for Goldman, said Apple Card, issued by Goldman, 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,” Carcaterra said in a statement, adding that the bank is “pleased to have reached a resolution with the CFPB.”

An Apple spokesperson said the tech giant worked closely with Goldman to quickly address the “inadvertent issues” when they arose years ago and help customers who were affected. Apple disagrees with the CFPB’s characterization of its conduct, but has reached an agreement with the agency, the spokesperson said in a statement.

The $45 million fine against Goldman pales in comparison to the $3 billion in profits that the bank reported last week in its third-quarter earnings. Goldman took in almost $13 billion in revenue in the last quarter, over $1 billion more than analysts’ projected.

But in its earnings report, Goldman underscored the continued challenges in its consumer-bank ambitions, from which the bank is struggling to retreat. The bank set aside $397 million for credit losses last quarter, a sharp increase from the previous quarter and the same period last year.

Last week, Goldman took a $415 million hit largely by selling its General Motors-branded credit cards to Barclays — and while it has yet to exit its Apple-branded cards, it has said it intends to do so, which could result in further losses.

In 2022, Goldman disclosed that the federal agency was looking into how the bank refunded cardholders, resolved billing disputes and reported consumer information to credit bureaus. Other government agencies have since joined in on inquiries into the bank’s credit-card business, Goldman said last year.

Some Goldman executives have privately blamed Apple for regulatory scrutiny of the bank’s credit-card business, according to The Wall Street Journal. Apple cardholders receive their bill at the start of each month, rather than on a rolling basis, leaving Goldman customer-service employees inundated with requests, according to the Journal.