Goldman Sachs faces $50M in fines over Apple Card failures

AppleInsider

Goldman Sachs could be forced to pay tens of millions of dollars in fines by the Consumer Financial Protection Bureau, over the way it handled complaints about Apple Card and other credit cards.

Apple Card

Goldman Sachs is keen to get out of its arrangement with Apple for Apple Card, which could cost it millions. But, before it sells off Apple Card to another firm, it faces having to pay out even more money.

The Consumer Financial Protection Bureau is preparing to order Goldman Sachs to pay out penalties for issues with its credit card business, sources of the Wall Street Journal say. While the enforcement is expected this week and the total penalties unknown, it is expected to cost Goldman Sachs in excess of $50 million.

The CFPB had investigated Goldman Sachs over how it dealt with fraud and refunds. One source claimed the probe had a particular focus on the Apple Card partnership.

The probe has been in operation since 2022, when Goldman disclosed the investigation into its "credit card account management practices." This included an examination into the lag time in addressing fraud problems and in issuing refunds, as well as other billing errors.

Goldman executives have apparently privately blamed Apple for the extra regulatory scrutiny, due to Apple's decision to send customers their bill at the beginning of the month. This allegedly made it hard for Goldman's customer service representatives to deal with the repeated monthly flood of queries.

While Goldman wasn't able to convince Apple to alter the billing date, Apple is apparently open to changing this with JPMorgan Chase. It is believed that JPMorgan Chase is in discussions with Apple about taking over the program from Goldman Sachs.

The fines will be hefty, but far from what Goldman has had to deal with in its consumer lending work. Since 2020, it had lost more than $6.5 billion on the consumer business, and it recently disclosed a $415 million pretax loss for the third quarter, due to selling the General Motors credit card program to Barclays.

Goldman faces a potentially bigger loss in handing on Apple Card in the future.



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Appleish

Oh No! A bank has to pay a tiny (to them) fee! The horrors!

Xed

I've had only one charge dispute with my Apple Card but it was enough to make me question whether I should use the card at all. That's how much of a nightmare this dispute was. Doing an iMessage-based claim (or card limit increase) couldn't be easier with the Apple Card, but the back end with GS was a nightmare.

I had made a legitimate purchase which never arrived. I forget the details about the mailing but I was able to contact the USPS to track the package which showed that it was returned to sender. The company in question said that it doesn't matter so they wouldn't resend or refund. I then used all this info to let GS know. It took several months and several attempts to finally get my card permanently refunded.

I hope that they've cleaned that up by now.

sdw2001

Now do Bank of America. I had a $10,000 fraudulent charge on my business account (debit) and they tried to tell me it could take 14 days to get my money back.