Goldman hit with probe into credit-card business by CFPB

GOLDMAN Sachs Group is facing a probe into its nascent credit-card business, adding another headache for the Wall Street giant's pursuit of the masses.

The Consumer Financial Protection Bureau (CFPB) is looking into the company's credit-card practices, including how it resolves incorrect bills and processes refunds, Goldman said in a regulatory filing on Thursday (Aug 4). The probe is also examining advertisements and how Goldman credits "nonconforming payments" and reports information to credit bureaus.

The bank is cooperating with the investigation, a spokesman for the New York-based firm said.

Goldman made a splashy entrance into the business in 2019 with the launch of the Apple Card, a tie-up with technology giant Apple It also announced a new credit card with General Motors earlier this year, adding another Main Street brand to its consumer business.

The bank has spent heavily to expand and attract customers to the business, but has yet to make the consumer venture profitable after more than 5 years since its launch. The firm's core business is trading and investment banking, and its consumer push is an attempt to find new income streams and diversify.

Goldman had about US$11.8 billion in credit-card balances at the end of June, according to the filing, with most of it tied to the Apple card.

Partnerships with popular mainstream companies are a way for Goldman to attract their customers as borrowers. chief executive officer David Solomon said in October that in addition to other tie-ups, the firm also sees opportunity for a proprietary card that's in development. Such a standalone card would be similar to popular offerings from the country's consumer-banking giants. BLOOMBERG