Good morning. Today, the CFPB is taking action against two of our country's most powerful corporations, Apple and Goldman Sachs. The companies violated consumer financial protection laws through their practices related to Apple Card, affecting hundreds of thousands of Apple Card users. This led to wrongful charges, mishandled disputes, and damaged credit reports. The CFPB is ordering refunds to victims, penalties for both companies, and placing restrictions on Goldman Sachs' ability to offer another credit card.

This case demonstrates once again that even the most powerful technology and financial companies can fail to meet their legal obligations to American consumers, causing real financial harm to individuals and families.

Here's some background: Apple makes a lot of money through selling devices like iPhones, iPads, and MacBooks. These products are costly compared to the alternatives. While Apple devices traditionally catered to higher income customers, much of their growth has depended on reaching broader customer segments. Many of these customers must trade in, sign up for payment plans, and borrow. Beyond device sales, Apple had its eyes on entering financial services, setting up new businesses like Apple Pay. However, Apple didn't control a bank, which would help further its ambitions. It ultimately found a willing partner in Goldman Sachs.

Goldman Sachs has long been a major player on Wall Street. Rather than taking deposits and making loans like a regular bank, Goldman Sachs historically focused on other activities, like investment banking for companies and wealth management for high-net-worth families. In September 2008, Lehman Brothers failed, accelerating a global financial crisis. Goldman Sachs and another Wall Street titan, Morgan Stanley, were in imminent danger. The following Sunday night, Goldman Sachs and Morgan Stanley went through their so-called deathbed conversion, transforming into bank holding companies with greater access to Federal Reserve support.

With this new status, Goldman Sachs could enjoy the new benefits of being a bank with insured deposits. Goldman Sachs later acquired other businesses and launched a new consumer brand called "Marcus." Goldman Sachs didn't really have experience in consumer banking and lending, but it found an opportunity with Apple.

Apple and Goldman Sachs moved to launch Apple Card together. The plan was that Goldman Sachs would be responsible for figuring out the mechanics of financing and account servicing, while Apple would manage marketing and other key activities. The execution was a mess.

The CFPB's investigation revealed that key systems related to Apple Card weren't ready. Goldman Sachs' board was even told about the problems, but it made the business decision to go forward anyway, since Apple negotiated a provision that allowed them to penalize Goldman $25 million for every 90 days of delay.

Our investigation uncovered three major breakdowns. First, Apple and Goldman Sachs failed to properly handle customer disputes. Apple failed to send tens of thousands of consumer disputes to Goldman Sachs for investigation. When disputes did reach Goldman, the bank failed to follow federal requirements for investigating and resolving them in a timely manner.

Second, Apple and Goldman Sachs misled consumers about interest-free payment options for Apple devices. Many customers were led to believe they would automatically receive interest-free financing when purchasing Apple products with their Apple Card. Instead, they were charged substantial interest.

Lastly, Goldman Sachs misled consumers about the application of refunds, leading to additional interest charges for consumers. This affected thousands of cardholders who incurred unexpected expenses.

These failures are not mere technicalities. They resulted in real harm to real people. Purchasing an Apple device is a major expense. Consumers faced long waits to get their money back for disputed charges. Some had incorrect negative information added to their credit reports. Others paid interest on purchases they believed would be interest-free.

The CFPB is ordering Apple to pay a $25 million penalty. We are also ordering Goldman Sachs to pay at least $19.8 million in redress to affected consumers and a $45 million penalty. We are not going to tolerate repeat offenses here. In addition to the redress and penalty, the CFPB is prohibiting Goldman Sachs from offering a new consumer credit card unless it can provide a credible plan demonstrating that the new product will actually comply with the law. Our efforts today represent our willingness to enforce the law fairly, without regard to size or clout.

Over the last few years, the CFPB has dramatically increased its capabilities and focus on technology companies offering financial services to consumers. For example, we have recruited technologists who are embedded in examinations and investigations. We have published major reports on payment regulations imposed by companies like Apple and Google. We have issued policy guidance on how existing laws apply to models powered by artificial intelligence. And, yesterday, we finalized a major rule to accelerate the shift to open banking that will help to promote competition and privacy in digital financial services.

Our goal at the CFPB is to ensure that as we move forward into this new era of digital finance, we do so in a way that aligns with our values of fair competition, robust consumer protection, and the national interest. While technological progress is essential to strengthen our banking and payments system, it must not come at the cost of consumer rights, personal privacy, or financial stability.

Thank you.