WASHINGTON, DC – The Consumer Financial Protection Bureau (CFPB) today announced that it has ordered Apple Inc. (NASDAQ: NASDAQ:) and Goldman Sachs Group, Inc. (NYSE: GS) to pay more than $89 million in fines for mishandling customer disputes and misleading consumers about payment options for Apple devices. This regulatory action follows findings that the companies’ practices violated federal consumer protection laws.
According to the CFPB, Apple failed to refer tens of thousands of consumer disputes regarding Apple Card transactions to Goldman Sachs. In cases where disputes were referred, Goldman Sachs failed to comply with federal requirements to investigate these disputes. This has led to delays in disputed charge refunds for consumers and, in some cases, unwarranted negative credit reports.
The investigation also found that Apple and Goldman Sachs provided misleading information about interest-free payment plans for Apple devices. Many customers thought they would receive interest-free monthly payments when purchasing Apple devices with their Apple Card, only to find out they were being charged interest. The CFPB noted that Apple’s website did not always display the interest-free payment option, particularly on browsers other than Safari.
In response to these findings, the CFPB imposes a civil penalty of 25 million euros on Apple and orders Goldman Sachs to pay at least 19.8 million euros in restitution to affected consumers, in addition to a civil penalty of 45 million euros. Additionally, the CFPB prohibits Goldman Sachs from launching a new credit card product unless the bank presents a credible plan demonstrating legal compliance.
The CFPB’s actions reflect its mandate to enforce federal consumer finance laws and ensure fair and transparent financial markets. The fines will contribute to the CFPB’s Victim Relief Fund, providing restitution to consumers affected by the companies’ illegal practices.
This announcement serves as a reminder that financial institutions and technology companies are subject to strict consumer protection regulations. The CFPB has made clear that it will closely monitor Goldman Sachs’ future moves in the credit card market to prevent further legal violations.
This enforcement action is based on a press release from the Consumer Financial Protection Bureau.
In other recent news, recent developments indicate Apple’s continued commitment to the Chinese market, with CEO Tim Cook meeting with Jin Zhuanglong, China’s Minister of Industry and Information Technology. The meeting highlighted mutual interest in fostering a beneficial relationship for Apple and China’s technology industry, with a focus on shared growth and dividends.
CFRA maintained its Buy recommendation on Apple shares, citing the potential of the company’s artificial intelligence (AI) capabilities and improving free cash flow. The firm expects iPhone revenue to grow at a mid-to-high single-digit percentage rate in fiscal years 2025 and 2026.
JPMorgan also maintained an Overweight recommendation on Apple shares, observing a change in product availability trends for the company’s latest iPhone models. Delivery times for Pro models have started to moderate, while base models have seen a slight increase.
Apple has seen an increase in iPhone sales in China, with a notable 20% increase in sales of its new models. However, overall iPhone sales saw a slight decline of 2%, attributed to a decrease in demand for older models and increased competition from domestic manufacturers.
In the UK, retail sales saw an unexpected increase in September, largely driven by the telecommunications and IT sector, coinciding with Apple’s release of its AI-focused iPhone 16 series. Despite concerns about possible tax increases, consumer spending appears to remain unaffected.
Perspectives InvestingPro
As Apple faces regulatory scrutiny and financial penalties, it is crucial to examine the company’s financial health and market position. According to InvestingPro data, Apple boasts a substantial market capitalization of €3.56 trillion, underscoring its dominant position in the technology sector. The company’s revenue for the trailing twelve months stands at €385.6 billion, with a gross margin of 45.96%, indicating strong financial performance despite regulatory challenges.
InvestingPro tips highlight the consistent dividend growth of Apple, which has increased its dividends for 12 consecutive years. This demonstrates the company’s commitment to shareholder returns, even in the face of regulatory headwinds. Additionally, Apple is known for its low price volatility, which can provide some stability to investors during uncertain times.
It’s worth noting that Apple is trading at a high P/E ratio of 35.7, which could suggest the stock is valued at a premium. This valuation metric, combined with recent regulatory action, may prompt investors to closely monitor the company’s future performance and compliance efforts.
For those looking for a more comprehensive analysis, InvestingPro offers 16 additional tips on Apple, providing deeper insights into the company’s financial health and market position.
