What the Latest Bad News for the Apple Card Means for Customers

A nearly $90 million ruling this week against Apple and Goldman Sachs — who together brought the Apple Card to market in 2019 — is the latest chapter in a dramatic breakup reportedly brewing between the two companies.

The Consumer Financial Protection Bureau has ordered the tech giant and the bank to pay more than $89 million combined in penalties after it determined that customer service issues surrounding their co-branded credit card led to consumer harm.

The Apple Card was a big bet for both Apple and Goldman Sachs, neither of which had a significant imprint in the consumer credit card market. The relationship between the two companies has been tumultuous at times, and indeed some of the CFPB's findings seem indicative of that tumult and lack of experience.

In 2023, Apple reportedly proposed exiting their contract in the next 12 to 15 months, and while the company hasn't yet found a new issuer to take Goldman Sachs' place, it has reportedly met with potential replacements.

What happened to affected Apple Card users

On Oct. 23, 2024, the CFPB said it had found that Apple and Goldman Sachs failed to properly handle disputed charges, and that cardholders were misled about payment plans and refunds for Apple product purchases. Here’s a breakdown of the CFPB's findings:

Issues with cardholder disputes

By law, consumers can dispute a credit card charge within 60 days when they see a fraudulent or incorrect charge on their credit card bill, or if a merchant fails to resolve an issue with a purchase. Following an investigation, the issuer will refund the consumer if it finds the dispute to be valid. Issuers must acknowledge receiving your complaint in writing within 30 days, and must resolve the dispute within 90 days.

Apple Card users could dispute charges through the Apple Wallet app, but in some instances, Apple didn’t send disputes to Goldman Sachs, according to the CFPB. The regulator said this left consumers on the hook for tens of thousands of disputed transactions. And when Goldman Sachs did receive disputes from Apple, the CFPB claims, it dropped the ball on both notifying consumers that their dispute was received, and also on explaining the results of their investigation later on. This meant that Goldman Sachs illegally placed incorrect information on consumers’ credit reports, the CFPB said.

Issues with Apple Card Monthly Installments

With Apple Card Monthly Installments, you could opt into a 0% APR payment plan when buying eligible Apple products with your Apple Card. However, according to the CFPB, unclear marketing for Apple Card Monthly Installments led consumers to believe they automatically got no-interest financing when buying Apple products, rather than having to proactively opt into it. Consumers also faced “confusing checkout options.” This resulted in thousands of consumers unexpectedly paying interest when financing Apple devices.

Additionally, affected consumers had two card balances: the installment plan balance and the revolving credit card balance. The CFPB states that more than 10,000 consumers were misled by Goldman Sachs when it came to how refunds would be applied to those balances. At times, the regulator said, refunds that should have been issued to the revolving credit card balance (which accrued interest) were actually issued to the interest-free installment plan balance, resulting in additional interest charges.

The consequences for Apple and Goldman Sachs

“While we strongly disagree with the CFPB’s characterization of Apple’s conduct, we have aligned with them on an agreement,” an Apple spokesperson said in an email.

That agreement comes out to more than $89 million in penalties. Apple must pay $25 million into the CFPB’s victims relief fund, which assists those harmed by companies that break federal consumer protection laws. Goldman Sachs must pay at least $19.8 million in redress to victims, plus a $45 million civil money penalty.

Should Goldman Sachs want to issue any new credit cards in the future, it will be subject to additional scrutiny from the CFPB. “The CFPB is banning Goldman Sachs from offering a new consumer credit card unless it can demonstrate that it can actually follow the law,” CFPB Director Rohit Chopra said in a statement.

Goldman Sachs doesn’t appear to be rushing into any new credit card partnerships, though. If anything, it seems to want out of the market entirely. Independent of the Apple Card, Goldman Sachs has moved to drop the My GM Rewards® Mastercard®, which it also issues. Under a partnership agreement announced this month, Barclays will be taking over as General Motors' credit card partner next summer.

What should consumers do?

According to the CFPB, consumers who are eligible for redress don’t have to take any actions. You may have already gotten the compensation you’re owed, but if not, expect to receive communication about it from Goldman Sachs.

Otherwise, keep an eye on your monthly credit card statements for unexpected charges, and report them to your credit card company quickly. You can also check your credit reports for free once a year at annualcreditreport.com, and dispute any errors to the credit bureaus.