Goldman Sachs and Apple were fined a total of $89 million for violating consumer protection laws. Reuters reports. The US Consumer Financial Protection Agency said the two companies mishandled transaction disputes and misled iPhone buyers about whether their purchases were actually interest-free as part of a partnership to finance Apple customers' purchases through the Apple credit card. This practice may have affected hundreds of thousands of people.
In addition to the penalties and remedies for consumers, Goldman will also face restrictions on issuing new credit cards, according to the statement.
The agency's director, Rohit Chopra, said the misconduct had caused “real harm to real people.” “This has led to mishandled disputes and damaged credit reports,” he told reporters, noting that this is important because purchasing an Apple device is often a major expense for families.
Goldman said in a statement that it was pleased that the case had been resolved. “We have worked hard to resolve some of the technological and operational challenges we encountered post-launch and have already addressed them with affected customers,” the statement read. Apple strongly rejected the CPA's description of the company's behavior, but agreed to the fine nonetheless. “When Apple became aware of these unintended issues years ago, it worked closely with Goldman Sachs to quickly address them and assist affected customers,” a company spokesperson said.
Sources told Reuters last December that Goldman Sachs's exit from the Apple partnership in 2019 would be costly, which other lenders considered risky and unprofitable. Since its failed foray into consumer banking, Goldman Sachs has focused on its traditional pillars of investment banking and trading.
According to the Consumer Protection Bureau, Apple did not send tens of thousands of consumer legal disputes to Goldman, and what it did send, the bank failed to vet according to the law. According to the agency, consumers had to wait too long to receive refunds, which unfairly hurt their credit scores. The companies also allegedly misled card users about interest-free payments for Apple devices, often pushing interest-free purchases into interest-free purchases — in some cases, the interest-free option only appeared when online consumers made purchases using Apple's web browser.
“We found that if consumers were using a browser other than Safari, or were shopping using Safari but in incognito mode, that option would not appear at checkout,” said Eric Halperin, the agency's chief enforcement officer.
Goldman will pay $19.8 million in damages to consumers and a $45 million fine, while Apple will pay a $25 million fine, according to the agency.
