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August 5, 2022

Goldman Sachs’ credit card business under regulatory lens

American banking giant Goldman Sachs has revealed that its nascent credit card business is being investigated by the top consumer watchdog.

In a regulatory filing, the bank informed that the Consumer Financial Protection Bureau (CFPB) is looking into its “credit card account management practices, including with respect to the application of refunds, crediting of nonconforming payments, billing error resolution, advertisements, and reporting to credit bureaus.”

Goldman Sachs said it is cooperating with the consumer watchdog.

Under the leadership of CEO David Solomon, the Wall Street bank has been trying to expand its retail banking operations in a bid to diversify its sources of revenue from investment banking and trading activities.

The bank has formed credit card partnerships with technology giant Apple and car manufacturer General Motors.

It offers the Apple Card, which was launched in 2019 and a co-branded credit card with GM, which hit the market at the start of this year.

Goldman Sachs did not specify which of the credit cards were subject to CFPB’s investigation.

Last month, CFPB director Rohit Chopra raised concerns about technology firms’ foray into the buy-now-pay-later (BNPL) space.

Chopra stated that tech giants’ entry into short-term lending “raises a host of issues”, including how firms would use customer data. “Is it being combined with browsing history, geolocation history, health data, other apps?”

The CFPB’s warning for tech giants came after Apple announced its plans to enter the BNPL fray.

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