When Apple announced it was launching Apple Card in 2019, 鈥渁 new kind of credit card鈥� that was 鈥渄esigned to help customers lead a healthier financial life.鈥�
Now, government regulators say Apple and its partner Goldman Sachs caused harm to hundreds of thousands of cardholders by mishandling disputed transactions and by using deceptive marketing practices.
The Consumer Financial Protection Bureau, a federal agency, to pay a combined $89 million in penalties and redress to those affected. The CFPB has also banned Goldman Sachs from launching a new credit card unless it provides 鈥渁 credible plan鈥� that the product will comply with the law.
鈥淭he companies violated consumer financial protection laws through their practices related to Apple Card,鈥� said CFPB Director Rohit Chopra in prepared remarks on Wednesday. 鈥淭his led to wrongful charges, mishandled disputes, and damaged credit reports.鈥�
The CFPB says the companies harmed consumers by failing to process disputed transactions, meaning cardholders were unfairly held responsible for the charges.
Goldman often failed to investigate the disputes Apple did send, damaging cardholders鈥� credit reports, the agency says. The companies also marketed interest-free financing if people used the card to buy Apple devices, but many cardholders who had expected to be automatically enrolled were instead charged interest.
An investigation by the CFPB found violations of the Consumer Financial Protection Act and the Truth in Lending Act.
鈥淭hese failures are not mere technicalities,鈥� Chopra added. 鈥淭hey resulted in real harm to real people.鈥�
The CFPB fined Goldman $45 million and ordered it to pay $20 million in redress to customers. Meanwhile, Apple was fined $25 million.
When it launched, Apple Card represented a new push into consumer lending for both the tech behemoth and the Wall Street giant. But the CFPB describes a rush to launch the card despite an array of problems that ultimately hurt users.
In statements to NPR, both Apple and Goldman Sachs defend the card as consumer-friendly.
鈥淲e worked diligently to address certain technological and operational challenges that we experienced after launch and have already handled them with impacted customers,鈥� said Nick Carcaterra, a spokesperson for Goldman Sachs, adding that the company is pleased to reach a resolution with the CFPB.
Apple said it had worked closely with Goldman Sachs to address the issues and help customers.
鈥淲hile we strongly disagree with the CFPB鈥檚 characterization of Apple鈥檚 conduct, we have aligned with them on an agreement. We look forward to continuing to deliver a great experience for our Apple Card customers,鈥� said an Apple spokesperson.
Apple is reportedly about taking over its credit card program from Goldman Sachs.
Copyright 2024 NPR
