Goldman Sachs says it's cooperating with CFPB probe of its credit cards

Goldman Sachs says it's cooperating with an investigation by the Consumer Financial Protection Bureau into the bank's credit card business.

Goldman, an investment bank that jumped into consumer finance several years ago, disclosed in a securities filing that the investigation relates to credit card account management practices at its GS Bank USA unit.

The investigation covers the "application of refunds, crediting of nonconforming payments, billing error resolution, advertisements, and reporting to credit bureaus," the filing said.

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In a statement Thursday, New York-based Goldman Sachs said that it is "cooperating with the CFPB on this matter." 

Goldman is the issuer of two consumer credit cards: the Apple Card, launched in 2019, and a General Motors co-branded card announced in January. It also recently bought the point-of-sale loan provider GreenSky, which offers a financing platform for home improvement contractors to health care providers.

Last year, before Goldman announced the deal to buy GreenSky, the CFPB imposed a $2.5 million fine on the Atlanta-based fintech and forced the company to refund consumers up to $9 million for allegedly letting merchants on its platform take out loans on behalf of customers who had not agreed to them.

The consumer bureau said that GreenSky got more than 6,000 customer complaints on the issue between 2014 and 2019.

Goldman Sachs reported $11.9 billion in credit card loans as of June 2022, up from $5.2 billion a year earlier.

Goldman Sachs ‘making progress’ on consumer bank revenue goal

The company has faced skepticism from investors over its push into consumer banking. Bloomberg News reported in June that the consumer unit could lose more than $1.2 billion this year, citing people familiar with Goldman's internal forecasts.

But Goldman Sachs CEO David Solomon has touted consumer banking as a resilient business line at a time when global markets are volatile. During the second quarter, consumer banking revenues jumped to $608 million, up 67% from a year earlier, providing a boost to Goldman's consumer and wealth management segment.

"You can obviously see this quarter that we're making progress on revenue in the business," Solomon told analysts during the company's earnings call last month.

In addition to consumer credit products, Goldman also offers high-yield savings accounts and automated investments through its Marcus brand. And it is testing checking accounts with its U.S. employees.