Goldman Sachs and Apple have been fined over $89 million by US regulators for failing to meet customer obligations in their joint Apple Card program.
The Consumer Financial Protection Bureau (CFPB) announced the penalties on Wednesday, accusing the companies of “illegally sidestepping” federal requirements and mishandling customer disputes.
The CFPB fined Goldman Sachs $45 million in civil penalties and ordered the bank to pay an additional $19.8 million in compensation to affected customers. Apple, which manages the design and marketing of the Apple Card, was fined $25 million. Both companies neither admitted nor denied the regulator’s findings in court documents.
The regulator’s investigation revealed that Apple failed to forward thousands of customer disputes to Goldman Sachs, while Goldman did not adequately investigate those disputes, violating federal rules. The companies were also found to have misled customers about interest-free payment plans for Apple products.
The penalties highlight the challenges the partnership has faced in the consumer finance space. For Goldman Sachs, the Apple Card initiative marked a significant move into retail banking, diverging from its traditional focus on investment banking and trading. However, after years of heavy losses, Goldman is now seeking an exit from the credit card business, including its partnership with Apple and other consumer-focused ventures.
In a statement, Goldman acknowledged the operational issues it encountered following the launch of the Apple Card but emphasized that it has worked to resolve them.
“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,” the company stated.
Apple, for its part, downplayed the CFPB’s claims, stating that it worked closely with Goldman to resolve issues when they first emerged.
“We strongly disagree with the CFPB’s characterization of Apple’s conduct, but we have aligned with them on an agreement,” Apple said.
The company reaffirmed its commitment to delivering a positive experience for Apple Card customers.
This setback for Apple comes as the tech giant continues to expand its footprint in financial services. Despite the fines, it is unlikely to slow the company’s broader ambitions in payments and banking. However, it does add to recent regulatory pressure Apple has faced, particularly in Europe, regarding its financial services offerings.
The CFPB’s action also underscores its broader concern about Big Tech’s growing role in the financial industry. The bureau is pushing for more oversight as companies like Apple integrate financial products with their tech platforms. CFPB Director Rohit Chopra has expressed concerns about the compliance capabilities of tech companies entering the financial space, emphasizing that Goldman Sachs will not be allowed to launch another credit card without demonstrating its ability to follow the law.
Goldman Sachs’ credit card division has already faced challenges, including partnerships with other companies like General Motors, which is now being taken over by Barclays. Goldman currently holds about $20 billion in credit card loans, a small portion of its $1.5 trillion in total assets.
This fine comes at a time when traditional banks, like JPMorgan, are increasingly viewing tech companies as direct competitors. JPMorgan CEO Jamie Dimon has pointed out that companies like Apple are moving into banking territory by offering services that allow consumers to move, hold, and lend money, positioning themselves as emerging competitors to conventional banks.
The Financial Times and the Washington Post contributed to this report.
