A U.S. regulator has sanctioned banking giant Goldman Sachs and tech giant Apple Inc. for customer-service failings connected to their joint foray into consumer finance.
The Consumer Financial Protection Bureau (CFPB) said the companies jointly launched a credit card before its transaction dispute resolution system was ready, which resulted in customer harm. Cardholders faced prolonged waits to get refunds for disputed charges, and incorrect information was reported to credit bureaus.
The regulator found that Apple failed to report tens of thousands of disputed transactions to Goldman Sachs, and that, when it did, the bank did not follow federal requirements for investigating the disputes.
The companies launched the card in 2019, “despite warnings to Goldman’s board… that the Apple Card disputes system was ‘not fully ready’ due to technological issues,” the CFPB said in its order.
As a result, it found that the bank violated various banking standards, such as “making adverse reports to consumer reporting agencies” about charges that were being disputed, failing to “conduct reasonable investigations” of these disputes, and holding consumers liable for charges that were under dispute “before conducting a reasonable investigation.”
In its order, the CFPB ordered Goldman Sachs to pay a US$45 million penalty and US$19.8 million in customer redress, and Apple was fined US$25 million. The CFPB also banned Goldman Sachs from launching any new credit cards unless it can provide a credible compliance plan.
The bank consented to the regulator’s order, without admitting or denying its findings.
“Apple and Goldman Sachs illegally sidestepped their legal obligations for Apple Card borrowers. Big Tech companies and big Wall Street firms should not behave as if they are exempt from federal law,” said CFPB director, Rohit Chopra, in a release.