Apple CEO Tim Cook introduces Apple Card during a launch event on March 25, 2019 at Apple headquarters in Cupertino, California.
Noah Berger | AFP | Getty Images
The Consumer Financial Protection Bureau ruled Apple And Goldman Sachs on Wednesday to pay more than $89 million for its mishandling of consumer disputes related to Apple Card transactions.
The office said Apple failed to refer tens of thousands of consumer disputes to Goldman Sachs. Even as Goldman Sachs received disputes, the CFPB said the bank did not follow federal requirements in investigating the cases.
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 banned Goldman Sachs from launching new credit cards unless the company can provide an adequate plan to comply with the law.
“Apple and Goldman Sachs have illegally avoided their legal obligations to 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.
Apple Card was first introduced in 2019 as a credit card alternative and is based on Apple Pay, the company's mobile payment and digital wallet service. The company partnered with Goldman Sachs as the issuing bank and promoted the card as simpler and more transparent than other credit cards.
In December of this year, the companies introduced a new feature that allowed users to finance certain Apple devices with the card in interest-free monthly installments.
But the CFPB found that Apple and Goldman Sachs misled consumers about interest-free payment plans for Apple devices. While many customers thought they would automatically receive interest-free monthly payments when they purchased Apple devices with an Apple Card, they were still charged interest. According to the CFPB, Goldman Sachs did not adequately inform consumers about how the refunds would work, which resulted in some people ultimately having to pay additional interest fees.
This also meant that some consumers had incorrect credit reports, the agency said.
“Apple Card is one of the most consumer-friendly credit cards ever offered. “We have worked diligently to address certain technological and operational challenges we faced post-launch and have already addressed them with affected customers,” Nick Carcaterra, vice president of corporate communications at Goldman Sachs, told CNBC. “We are pleased to have found a solution with the CFPB and are proud to have worked with Apple to develop such an innovative and award-winning product.”
When Apple learned of this, it said it had worked closely with Goldman Sachs to address the issues.
“While we strongly disagree with the CFPB’s characterization of Apple’s conduct, we have reached an agreement with them,” an Apple spokesperson said. “We look forward to continuing to provide a great experience for our Apple Card customers.”
— CNBC's Hugh Son and Steve Kovach contributed to this report.