Apple CEO Cook introduced Apple Card at a press conference held at Apple headquarters in Cupertino, California on March 25, 2019.
Noah Berger | AFP | Getty Images
Consumer Financial Protection Bureau Order apple and Goldman Sachs Apple on Wednesday paid more than $89 million in damages for improperly handling consumer disputes related to Apple Card transactions.
The bureau said Apple failed to refer tens of thousands of consumer disputes to Goldman Sachs. Even if Goldman Sachs did receive the dispute, the CFPB said the bank failed to follow federal requirements in investigating the case.
Goldman Sachs was ordered to pay a $45 million civil penalty and $19.8 million in restitution, while Apple was fined $25 million. The bureau also prohibited Goldman Sachs from launching new credit cards unless it could offer appropriate programs to comply with the law.
CFPB Director Rohit Chopra said: “Apple and Goldman Sachs illegally avoided their legal obligations to Apple Card borrowers. Big technology companies and large Wall Street firms should not act as if they are not subject to federal law. ”
Apple Card was first launched in 2019 as a credit card alternative to Apple Pay, the company’s mobile payment and digital wallet service. The company partners with Goldman Sachs as its issuing bank and promotes the card as simpler and more transparent than other credit cards.
In December of the same year, the two companies launched a new feature that allows users to use the card to finance certain Apple devices through interest-free monthly installments.
But the CFPB found that Apple and Goldman Sachs misled consumers about interest-free payment plans for Apple devices. Although many customers think they automatically get interest-free monthly payments when they buy an Apple device using the Apple Card, they still have to pay interest. According to the CFPB, Goldman Sachs did not adequately communicate with consumers how the refunds would work, meaning some ended up paying additional interest charges.
It also means some consumers have incorrect credit reports, the agency said.
“Apple Card is one of the most consumer-friendly credit cards ever. We worked hard to address certain technical and operational challenges we encountered after launch and have already resolved these issues for affected customers.” Nick Carcaterra, Vice President of Apple Card explain. “We are pleased to have reached a resolution with the CFPB and proud to work with Apple to develop such an innovative and award-winning product.”
Representatives for Apple did not immediately respond to CNBC’s request for comment.
—CNBC’s Hugh Son contributed to this report.
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