Goldman Sachs’ Apple Card nightmare continues to get worse. A new report today reveals that the Consumer Financial Protection Bureau is set to fine Goldman Sachs after an investigation into its customer service practices for Apple Card.
The CFPB fine comes as Goldman Sachs continues to search for an exit from its Apple Card partnership after billions of dollars in losses.
Goldman Sachs confirmed the probe two years ago, saying that it was fully cooperating with the CFPB. The investigation focused on Goldman’s “credit card account management practices, including with respect to the application of refunds, crediting of nonconforming payments, billing error resolution, advertisements, and reporting to credit bureaus.”
Today’s report from The Wall Street Journal says that the CFPB is set to reveal its enforcement action against Goldman Sachs this week. While the exact amount of the fine remains unclear, the report says it is “expected to be north of $50 million.” Some of the penalties will include customer reimbursements, likely related to failed customer disputes.
One of the primary focuses of the CFPB’s probe has been Goldman’s handling of disputes. This is when a customer files a chargeback on a transaction, either because it was unauthorized or because the goods or services were not as the merchant described.
Goldman built its own platform for handling customer disputes rather than using existing off-the-shelf systems, according to past reports. The bank ultimately ended up receiving far more disputes than it had anticipated, leading to customer service and logistical problems.
The Wall Street Journal also says that “some Goldman executives have blamed Apple for regulatory scrutiny.” In particular, Apple Card’s billing system, where all cardholders receive their statement at the beginning of the month, has led to a number of challenges for the bank. Typically, credit card companies issue statements over the course of the entire month to spread out potential customer service complaints and other problems.
With all that said, Goldman Sachs is in the process of exiting its Apple Card partnership and exiting the consumer business entirely. This comes as Goldman’s losses from its consumer business continue to mount, recently surpassing $6 billion. Talks between Apple and JPMorgan Chase are said to have started earlier this year, but there’s no timeline on when a deal will be finalized.
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