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A federal regulator on Wednesday ordered Apple (AAPL-3.62%) and Goldman Sachs (GS+1.09%) to pay more than $89 million in redress and penalties for failures related to the Apple credit card.
The Consumer Financial Protection Bureau said that the Apple Card, which is run through a partnership between the tech giant and Goldman Sachs, had several customer service breakdowns and misrepresentations that impacted hundreds of thousands of users.
“The CFPB found that Apple failed to send tens of thousands of consumer disputes of Apple Card transactions to Goldman Sachs, and when Apple did send disputes to Goldman Sachs, the bank did not follow numerous federal requirements for investigating the disputes,” the agency said in a statement.
It said the two companies launched the card despite “third-party warnings” to Goldman Sachs that Apple’s payment disputes system wasn’t ready. The result meant consumers often had to wait too long to get money back from disputed charges, the CFPB said.
It ordered Goldman Sachs to pay at least $19.8 million in redress and a $45 million civil penalty. It ordered Apple to pay a $25 million civil penalty.
Goldman Sachs is not allowed to debut a new credit card “unless it can provide a credible plan that the product will actually comply with the law,” the CFPB said.
The CFPB also said that Apple and Goldman Sachs misled consumers about interest-free payment plans for Apple devices, charging consumers interest when they thought they wouldn’t be charged.
“Apple and Goldman Sachs illegally sidestepped their legal obligations for Apple Card borrowers,” CFPB Director Rohit Chopra said in a statement. “Big Tech companies and big Wall Street firms should not behave as if they are exempt from federal law.”
An Apple spokesperson said the company “is committed to providing consumers with fair and transparent financial products.”
“While we strongly disagree with the CFPB’s characterization of Apple’s conduct, we have aligned with them on an agreement,” the company said. “We look forward to continuing to deliver a great experience for our Apple Card customers.”
Goldman Sachs said it “worked diligently to address certain technological and operational challenges that we experienced after launch and have already handled them with impacted customers.”
“We are pleased to have reached a resolution with the CFPB and are proud to have developed such an innovative and award-winning product alongside Apple,” it added.