Apple Card growth, suppliers blamed for risks in Goldman card business

Apple CEO Tim Cook introduces the Apple Card during a launch event at Apple’s headquarters on Monday, March 25, 2019, in Cupertino, California.

Noah Berger | AFP | beautiful pictures

When it gets reveal men 2019, Apple tout its new credit card as a game with unprecedented levels of simplicity and transparency.

However, behind the scenes, the rapid development of new cards and platforms built by Goldman Sachs serving it has created difficulties, leading to failures that are more reminiscent of a traditional issuer than a troublemaker in front of customers, according to people with knowledge of the matter.

Goldman has struggled to handle a larger-than-expected stream of disputed transactions, known in the industry as reimbursement, according to the people. Chargebacks occur when a customer seeks a refund for a product or service paid for on their card for any reason. Disputes, which put banks in a state of disagreement between customers and sellers, have soaring during the pandemic, according to payment consultants.

When an Apple Card user disputes a transaction, Goldman must find a way to resolve it within the required regulatory timelines, and sometimes that doesn’t work out, the people who requested anonymity spoke candidly about the situation. said. These people said that sometimes customers are given conflicting information or have to wait a long time.

One source said Goldman has more disputes than expected. “You have these queues that you need to deal with in a certain amount of time. The business got so big, suddenly we 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 flared up in public on August 4, when the New York-based investment bank disclosure The Consumer Financial Protection Bureau probes a range of billing and service issues. (Goldman doesn’t mention Apple in the filing, but most of its $11.84 billion card loans to date have been from Apple Card; the bank launched the GM-branded card in January.)

The regulator is reviewing Goldman’s customer transactions, “including applying for refunds, crediting inappropriate payments, resolving payment errors, advertising and reporting to clients.” credit bureau,” the bank said.

Regulators have focused on customer complaints over the past few years, and the largest source of them has come from attempting reimbursement, the people said.

Disputes can be difficult to resolve: Customers sometimes try to game the system by seeking refunds for legitimate purchases. In other cases, its merchants do not always come. While refunds related to the identification of theft or items never received should be clearly cut, there are also more nuanced cases when customers complain that an event like music festival does not match its payment.

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

“Goldman Sachs held me accountable for a $930 charge made at an Apple store with Apple Pay that I did not make,” according to a Reddit parcel. “So far, I have never experienced less professional service from a large company, and this has been a complete nightmare.”

Edge cases

While the bank was automatic way According to the people, in order for customers to record customer disputes through their iPhone, they have done less work in streamlining the resolution of such cases. They said the bank had initially failed to account for what insiders described as “competitive circumstances” or circumstantial situations in the majority of transactions.

“We’ve made the case that we have a seamless way to dispute transactions,” the source said. “But we didn’t get any credit for the user interface, and we had some back-end failures.”

Another piece of the puzzle is that Goldman has relied on three outside vendors to help service Apple Card to customers. Called business process organizations, or BPOs, the sector often struggles with high worker turnover, which increases representation that is new or inadequately trained.

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

The email acknowledges that Apple has “determined that certain customer-initiated disputes may not have been correctly resolved,” according to the report. report.

Pain is increasing

Sure, there are plenty of customers on Reddit who say they’ve had good experiences with the Apple Card. The product has won a reward from JD Power for customer satisfaction last year.

Sources called the bank’s problems the growing difficulties of a new business seeing an unprecedented spike in customers. Apple Card users doubled to 6.4 million in May 2021 from the year before, 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 US credit card industry, and the Apple Card represents its biggest step forward into the financial lives of ordinary Americans. The card players rely heavily on a decades-old technology system, the investment banker having chosen to build its own platform, the people said.

In response to regulatory scrutiny, Goldman has redirected resources to more automating the chargeback process, one of them said.

Meanwhile, frustrated Apple Card users on online forums say there’s a sure way to improve Goldman’s response.

After “6 phone calls, 3 supervisors and 4 months of waiting, the matter was miraculously resolved”, one Reddit poster Written. “Suspicious, it was resolved a few days after I filed a complaint with the CFPB outlining all my problems. If you have the same problem, CALL a COMPLAINT with the CFPB.”

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