Goldman Sachs (GS) and Apple (AAPL) have been ordered to pay $89 million for violations in their joint credit card business, impacting hundreds of thousands of customers, according to the U.S. Consumer Financial Protection Bureau. The agency cited Goldman’s mishandling of transaction disputes and Apple's misleading practices around interest-free payments on iPhone purchases. Goldman will face additional restrictions on issuing new credit cards as part of the settlement.
The violations reportedly caused significant harm to consumers, including wrongful charges, mishandled disputes, and damaged credit reports. Apple and Goldman both issued statements expressing their commitment to resolving the issues, with Apple claiming it disagreed with the agency’s characterization of events but worked closely with Goldman to address the problems.
Market Overview:- Goldman Sachs and Apple to pay $89 million over violations of consumer protection laws.
- The violations affected credit card users, causing wrongful charges and mishandled disputes.
- Goldman faces new restrictions on issuing credit cards following the settlement.
- Goldman and Apple allegedly misled consumers about interest-free purchases of Apple devices.
- The settlement includes $19.8 million in consumer redress and a $45 million fine for Goldman.
- Apple is required to pay a $25 million fine and submit compliance plans moving forward.
- Goldman’s partnership with Apple is seen as too risky and costly, raising doubts about future consumer ventures.
- Apple must present a compliance plan to continue offering credit services under tighter regulations.
- Goldman is refocusing on its core investment banking and trading operations after its consumer banking losses.
Despite the hefty settlement, both Goldman and Apple are focused on addressing the issues raised by the Consumer Financial Protection Bureau. Goldman's exit from its partnership with Apple marks a shift away from consumer banking, which has cost the firm billions. The company is now returning to its traditional strengths in investment banking and trading.
As for Apple, the tech giant is required to submit a compliance plan that ensures its future credit services meet consumer protection laws. With financial penalties in place and stricter oversight from regulators, both companies face significant operational challenges ahead. The market will be watching closely for any additional fallout from this high-profile settlement.
