Consumer complaint received 2024-10-04
Product: Credit reporting or other personal consumer reports — Credit reporting
Issue: Problem with fraud alerts or security freezes — 
Company: GOLDMAN SACHS BANK USA (NV)

Summary of Issues for CFPB Complaint Against Goldman Sachs 1. Inaccurate or Misleading Justification for Credit Limit Reduction : Issue : Goldman Sachs reduced the Apple Card credit limit from {$5000.00} to {$1500.00} ( a 70 % reduction ), citing a " recent drop '' in the users XXXX XXXX XXXX and that the user was reported as past due on one or more accounts. 
Problem : The provided reason does not align with the user 's credit history. The user 's credit score has been consistently low for over two years with no new negative items. Additionally, the user has made timely payments on this card, including interest, and recently paid off the balance. 
Potential Violation : This action could violate the Fair Credit Reporting Act ( FCRA ) under 1681m, which requires that adverse actions based on credit information must be justified, accurate, and specific to the consumers actual credit profile. 

2. Failure to Properly Consider Fraud Alerts and Credit Freezes : Issue : The user 's information was compromised, leading to the placement of fraud alerts and credit freezes on all major credit bureaus. This was a proactive measure to prevent identity theft and not indicative of a drop in creditworthiness.

Problem : The reduction occurred shortly after the credit freezes were implemented, which suggests that the bank may have misinterpreted the presence of fraud alerts and freezes as a negative credit event. This approach conflicts with the FCRA 's requirement that fraud alerts or credit freezes should not result in adverse actions by creditors. 
Potential Violation : Under the FCRA, adverse actions taken solely because of the presence of fraud alerts or freezes without considering the underlying creditworthiness may be viewed as an unfair practice.

3. Retaliatory Reduction Following Positive Account Activity : Issue : The credit limit reduction occurred 22 days after the user paid off the balance on the account.

Problem : This timing suggests potential balance chasing, a practice where credit limits are reduced after a payoff, making the action appear punitive rather than a response to changes in credit risk. This could be viewed as an unfair, deceptive, or abusive act or practice ( UDAAP ) under CFPB guidelines. 
Potential Violation : The Credit CARD Act of 2009 mandates that decisions to reduce credit limits should be based on clear, objective creditworthiness criteria and not arbitrary actions that harm consumers after positive financial behavior.

4. Lack of Good Faith Compliance and Preventable Harm : Issue : The user requested that the bank temporarily restore the credit limit during its 10-day review period to prevent further harm to the credit score. The bank refused, despite being aware of the negative impact on the users credit utilization ratio and overall credit profile. 
Problem : The banks refusal to act to prevent ongoing damage, while conducting a review that could ultimately show that the reduction was improper, suggests a lack of good faith and reasonable measures to prevent harm. 
Potential Violation : This could be seen as a failure to act reasonably under the Fair Credit Reporting Act ( FCRA ) and the Equal Credit Opportunity Act ( ECOA ) if the refusal is based on inappropriate factors. 

5. Adverse Action Notice Does Not Align with Credit Profile : Issue : The adverse action notice states that the reduction was based on a " recent drop in the XXXX XXXX XXXX '' and a report of being " past due on one or more accounts. '' Problem : The users credit profile does not show new delinquencies or a recent score drop beyond the consistent low score maintained for over two years. This suggests that the decision might be based on incorrect or incomplete credit information. 
Potential Violation : This may be a violation of FCRAs requirements for adverse action notices under 1681m, which mandates that the specific factors leading to adverse decisions must be clearly stated and accurate.

Requested Remedies : Immediate Restoration of the Credit Limit to the previous amount of {$5000.00} pending a thorough review of the decision. 

Compensatory Damages for any negative impact on credit scores, financial harm due to increased credit utilization ratio, and emotional distress. 

Request for Reconsideration and Re-Evaluation of the users credit profile, taking into account the positive payment history and the protective nature of fraud alerts and freezes. 
Investigate Potential UDAAP Violations related to the timing and nature of the credit limit reduction.