The Consumer Financial Protection Bureau (CFPB), a government watchdog agency, issued a $89 million fine against Apple Inc (NASDAQ:AAPL) and Goldman Sachs (NYSE:GS) due to "service breakdowns and misrepresentations" that impacted Apple Card users. The agency claims these missteps affected hundreds of thousands of Apple Card holders.
The Context: Apple launched the Apple Card in partnership with Goldman Sachs in late 2019. The CFPB states that Goldman Sachs was aware that some of Apple's transaction dispute systems were not functioning properly ahead of the launch, but the companies decided to proceed anyway.
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This led to customers encountering long wait times to receive refunds for disputed transactions, with some Apple Card users having incorrect negative information added to their credit reports. The CFPB also alleges that Apple and Goldman misrepresented interest-free monthly payments on Apple products through the card, with customers charged interest despite the advertised perk of zero-interest monthly installments for Apple products.
The CFPB issued $89 million in fines for the service breakdown, with around $20 million allocated for victim redress.
The Details: The CFPB ordered Apple to pay $25 million, which will go to CFPB's victim relief fund. On top of the $20 million Goldman was ordered to repay to victims, the bank must also pay a $45 million civil money penalty, according to the CFPB.
The agency also ruled that Goldman will be unable to start a new credit card business until it can prove that these issues were resolved.
"The CFPB is also banning Goldman Sachs from launching a new credit card unless it can provide a credible plan that the product will actually comply with the law," the CFPB said in its press release.
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