A U.S. financial regulator has opened an investigation into claims Apple’s credit card offered different credit limits for men and women.
It follows complaints that algorithms used to set credit card limits may be inherently biased against women.
“My wife and I filed joint tax returns, live in a community-property state, and have been married for a long time,” software entrepreneur David Heinemeier Hansson tweeted Thursday. “Yet Apple’s black box algorithm thinks I deserve 20x the credit limit she does. No appeals work. Even when she pays off her ridiculously low limit in full, the card won’t approve any spending until the next billing period.”
Later, Steve Wozniak, who co-founded Apple with Steve Jobs, tweeted that the same thing happened to him and his wife despite their having no separate assets or bank accounts. “The same thing happened to us. We have no separate bank accounts or assets of any kind. We both have the same high limits on our cards, including our AmEx Centurion card. But 10x on the Apple Card,” Wozniak wrote.
New York’s Department of Financial Services (DFS) has contacted Goldman Sachs, which runs the card. Any discimination, intentional or not, “violates New York law,” the DFS said. Linda Lacewell, superintendent of the state’s Department of Financial Services, dismissed Goldman Sachs’ defense that the credit limits are scored by an algorithm that scores individual creditworthiness.
“New York law prohibits discrimination against protected classes of individuals, which means an algorithm, as with any other method of determining creditworthiness, cannot result in disparate treatment for individuals based on age, creed, race, color, sex, sexual orientation, national origin, or other protected characteristics,” Lacewell stated in a post on Medium.
Banks and other lenders are increasingly using machine-learning technology to cut costs and boost loan applications. Hansson said Apple’s indiscretion highlights how algorithms, not just people, can discriminate.
“Apple Card is a sexist program. It does not matter what the intent of individual Apple reps are, it matters what THE ALGORITHM they’ve placed their complete faith in does. And what it does is discriminate,” Hansson tweeted. He also said that as soon as he raised the issue, his wife’s credit limit was increased.
The DFS said in a statement that it “will be conducting an investigation to determine whether New York law was violated and ensure all consumers are treated equally regardless of sex.” “Any algorithm that intentionally or not results in discriminatory treatment of women or any other protected class violates New York law.”
On Saturday, Goldman Sachs investment bank told Bloomberg: “Our credit decisions are based on a customer’s creditworthiness and not on factors like gender, race, age, sexual orientation or any other basis prohibited by law.”
The Apple Card, launched in August, is Goldman’s first credit card. The Wall Street investment bank has been offering more products to consumers, including personal loans and savings accounts through its Marcus online bank.
The iPhone maker markets Apple Card on its website as a “new kind of credit card, created by Apple, not a bank”.
Sources: Twitter 11/7/19; Twitter 11/10/19; BBC 11/11/19; LA Times 11/11/19