Growth of Apple Card, vendors blamed for incidents in Goldman Card business


Apple CEO Tim Cook shows off Apple Card during a launch event at Apple Headquarters on Monday, March 25, 2019 in Cupertino, California.

Noah Berger | AFP | Getty Images

When it was unveiled in 2019, Apple presented its new credit card as a game changer with unheard of levels of simplicity and transparency.

Behind the scenes, however, the rapid growth of the card and the new platform built by Goldman Sachs to service it have created difficulties, leading to failures more reminiscent of a traditional issuer than a customer-focused disruptor, people say. knowing the subject.

Goldman has struggled to handle a larger-than-expected influx of disputed transactions, known in the industry as chargebacks, people say. Chargebacks occur when a customer requests a refund for a product or service charged to their card for a number of reasons. Litigation, which puts banks in the middle of disagreements between customers and merchants, has skyrocketed during the pandemic, according to payments consultants.

When an Apple Card user disputes a transaction, Goldman must seek a resolution within regulatory deadlines, and that has sometimes failed, said the people, who requested anonymity to speak candidly about the situation. Customers sometimes received conflicting information or had long wait times, the people said.

Goldman has had more litigation than expected, a source said. “You have these queues that you have to eliminate in a certain amount of time. The business was getting so big that we suddenly had to create more automation to deal with it.”

Goldman Sachs declined to comment for this article, and an Apple representative did not immediately respond to a request for comment.

“A Complete Nightmare”

Goldman’s card business problems came to light on August 4, when the New York-based investment bank revealed a Consumer Financial Protection Bureau investigation into a series of billing and service issues. (Goldman made no mention of Apple in the filing, but most of its $11.84 billion in card loans to date have come from the Apple Card; the bank launched a GM-branded card in January. .)

The regulator is reviewing Goldman’s customer relationships, “including with respect to applying refunds, crediting non-compliant payments, resolving billing errors, advertisements and reporting to credit bureaus,” said said the bank.

Regulators are focusing on customer complaints from past years, and the biggest source of those come from attempted chargebacks, the people said.

Disputes can be tricky to resolve: customers sometimes try to game the system by asking for refunds for legitimate purchases. In other cases, its traders who are not always available. While refunds involving identity theft or items that were never received should be clear, there are also more nuanced cases where customers complain that an event like a music festival was not up to its billing.

In online credit card forums, several users complained that Goldman initially refused to side with them despite evidence of fraud.

“Goldman Sachs is holding me liable for a $930 charge that was made at an Apple store using Apple Pay and which I failed to pay,” according to a Reddit post. “I have never experienced such professional service from a large company so far, and it has been an absolute nightmare.”

edge case

While the bank had automated ways for customers to log customer disputes through their iPhones, it had done less work to streamline resolving those cases, people said. The bank did not initially consider what insiders considered “edge cases,” or situations that break the norm in the vast majority of transactions, they said.

“We were arguing that we had a transparent way to challenge transactions,” the source said. “But we didn’t get any credit for the front-end, and we had a few failures on the back-end.”

Another part of the puzzle is that Goldman has relied on three outside vendors to help serve Apple Card customers. Known as business process organizations, or BPOs, the industry often struggles with high worker turnover, which increases the chances that a representative is new or not fully trained.

In February, Apple sent some card users a notice giving them the option to resubmit old disputes, according to industry publication 9to5Mac.

The email acknowledged that Apple had “identified that certain customer-initiated disputes may not have been properly resolved,” according to the report.

Growing pains

To be sure, there are plenty of customers on Reddit who say they have had good experiences with the Apple Card. The product won a JD Power award for customer satisfaction last year.

Sources have described the bank’s problems as difficulties in growing a new business which has seen an unprecedented increase in the number of customers. Apple Card users doubled to 6.4 million in May 2021 from a year earlier, according to Cornerstone Advisors. Goldman’s outstanding loans nearly doubled last year, according to the Nilson report.

Goldman is still a relative newcomer to the American credit card industry, and the Apple Card represented its biggest breakthrough in the financial lives of ordinary Americans. While major card players rely on decades-old technology systems, the investment bank has opted to build its own platform, the people said.

In response to the regulatory review, Goldman has redirected resources to further automate the chargeback process, one of the people said.

Meanwhile, frustrated Apple Card users in online forums said there was a surefire way to improve Goldman’s response.

After “6 phone calls, 3 supervisors, and 4 months of waiting, this was magically resolved,” wrote a Reddit poster. “Suspiciously, this was resolved within days of filing a complaint with the CFPB stating all my issues. If you encounter the same, FILE A COMPLAINT with the CFPB.”


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