Apple and investment bank Goldman Sachs mishandled disputes and misled iPhone purchasers about interest-free payment options through their Apple Card partnership, delaying refunds for customers on disputed transactions or leaving damaging information in their credit reports, federal regulators said Wednesday.
The Consumer Financial Protection Bureau levied a $25 million fine against Apple and ordered Goldman Sachs to pay a $45 million penalty and at least $19.8 million in customer refunds. The agency also restricted the investment bank's availability to offer another credit card without a compliance plan.
The CFPB characterized Apple Card, which launched in 2019, as a way for Goldman Sachs to get a foothold in consumer financing and Apple a financing mechanism to help drive up sales of its devices.
Apple marketed and designed customer interfaces for the credit card, while Goldman Sachs managed financing and account servicing.
Four days before the card's launch, the Goldman Sachs board of directors learned its dispute systems were "not fully ready" because of technological issues but moved forward anyway, the CFPB said. Apple had the right to impose a $25 million penalty for each 90-day wait caused by the bank.
After the launch, Apple failed to send tens of thousands of customer disputes to Goldman Sachs, regulators said, and the problem continued even after the bank told Apple about it.
For disputes Goldman Sachs received, the bank didn't always send acknowledgment and resolution letters or conduct investigations as required -- leaving some cardholders responsible for potentially fraudulent purchases or with dinged credit reports, the CFPB said.
Some customers were also led to believe they would get interest-free financing when buying Apple devices with Apple Cards but were charged interest anyway, regulators said. The interest-free plan wasn't offered as an option on some internet browsers.
Goldman Sachs said it is pleased to reach a resolution with federal regulators.
"Apple Card is one of the most consumer-friendly credit cards that has ever been offered," spokesman Nick Carcaterra said. "We worked diligently to address certain technological and operational challenges that we experienced after launch and have already handled them with impacted customers."
An Apple spokesperson said the company disagrees with federal regulators' characterizations of its conduct but has "aligned with them on an agreement."
"Upon learning about these inadvertent issues years ago, Apple worked closely with Goldman Sachs to quickly address them and help impacted customers," the spokesperson said.