Consumer Financial Protection Bureau Orders Apple and Goldman Sachs to Pay Penalties

The Consumer Financial Protection Bureau (CFPB) revealed on Wednesday that it has ordered Apple and Goldman Sachs to pay over $89 million in penalties and restitution.

Background

This action arises from mishandling Apple Card disputes and misleading consumers regarding interest-free payment options for Apple products.

The CFPB reported significant customer service breakdowns and misrepresentations affecting hundreds of thousands of Apple Card users.

Findings

• Apple's Failures: The CFPB found that Apple did not forward tens of thousands of consumer disputes regarding Apple Card transactions to Goldman Sachs.
• Goldman Sachs's Violations: When disputes were forwarded, Goldman Sachs failed to comply with federal requirements for investigating those disputes.
• Credit Report Violations: Goldman Sachs illegally placed damaging information on consumers' credit reports and incorrectly held cardholders accountable for potentially fraudulent purchases.
• Deceptive Marketing: Marketing practices misled Apple Card users into believing they were automatically enrolled in interest-free payment plans, with unexpected interest charges occurring instead. This confusion was worsened as the payment plan option was only visible to customers using the Safari browser.

Financial Penalties

The enforcement action includes:
– A $25 million civil penalty against Apple.
– At least $19.8 million in redress and a $45 million civil penalty against Goldman Sachs.

Additionally, Goldman Sachs must present a credible plan to the CFPB before introducing any new credit card product to ensure law compliance.

Statement from CFPB Director

CFPB Director Rohit Chopra stated, "Big Tech companies and big Wall Street firms should not behave as if they are exempt from federal law. The CFPB is banning Goldman Sachs from offering a new consumer credit card unless it can demonstrate that it can actually follow the law."