Goldman Sachs' credit card unit investigated by US watchdog

In a securities filing, Goldman Sachs said the CFPB is examining several the company's credit card account management practices, including refunds, resolving billing errors, advertisements, and reporting to credit bureaus.

As representatives stated, the bank is cooperating with the CFPB on this matter. The Wall Street bank, known for handling money for wealthy clients as well as offering corporate banking and advisory services, has been recently pushing into retail banking, including the rollout of its Marcus by Goldman Sachs personal loan unit in 2016. The bank also waded into the credit card business via the Apple Card in 2019 and General Motors-branded cards through its Marcus division. 

As AppleInsider points out, it's likely that the investigation is centred on the Apple Card. Other than a co-branded credit card with General Motors, the Apple Card represents Goldman Sachs' only consumer credit card product. This is not the first time that Goldman Sachs has been investigated for credit card products. In 2019, the bank was accused of discriminatory behaviour on allegations that longer lines of credit were distributed based on gender.

In 2021, the New York State Department of Financial Services cleared Goldman Sachs of those claims after an investigation. The Apple Card hasn't been spotless since its debut in 2019. Issues has included erroneous cash back rates and system problems that prevented users from making bill payments or accessing account management features.

While it's not clear what sparked the CFPB investigation, the bureau's database includes hundreds of consumer complaints about Goldman since 2019, as CBS News notices. Some involve problems receiving a refund or disputing fraudulent charges. Some customer complaints involve fees and trouble using Goldman-branded credit cards because of locked accounts or other issues.

Recent endeavours

At the beginning of August 2022 Goldman Sachs signed a variation to their agreement with US-based instalment solution Splitit for a USD 150 million receivables funding facility. The revised facility terms were forecast to save Splitit up to USD 5.3 million across a 2-year period, when including the volume and reduced interest rates associated to the global merchant expansion. Exclusive of the global merchant expansion savings, the interest savings would still be forecast to be up to USD 2.1 million across a 2-year period.

A bigger move, however, came earlier in July, when Goldman Sachs lent LATAM’s major ecommerce platform MercadoLibre USD 233 million. The company plans to expand its credit offering in two new countries (Mexico and Brazil), with Mercado Pago to use USD 106 million to boost its credit portfolio aimed for individuals and small businesses in Brazil.