Tweet claiming sex bias sparks Apple Card probe

NEW YORK • A Wall Street regulator is opening a probe into Goldman Sachs Group's credit card practices after a viral tweet from a tech entrepreneur alleged gender discrimination in the new Apple Card's algorithms when determining credit limits.

A series of posts from Mr David Heinemeier Hansson starting last Thursday railed against the Apple Card for giving him 20 times the credit limit that his wife got. The tweets, many of which contain profanity, immediately gained traction online, even attracting comment from Apple co-founder Steve Wozniak.

Mr Hansson, creator of the popular programming tool Ruby on Rails and a partner at Basecamp, a Web-based software development firm, did not disclose any specific income-related information for either of them but said they filed joint tax returns and that his wife has a better credit score than he does.

"The department will be conducting an investigation to determine whether New York law was violated and ensure all consumers are treated equally regardless of sex," said a spokesman for Ms Linda Lacewell, the superintendent of the New York Department of Financial Services. "Any algorithm that intentionally or not results in discriminatory treatment of women or any other protected class of people violates New York law."

Goldman spokesman Andrew Williams said: "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."

Mr Hansson said Goldman's response does not explain what happened after he started airing his issues on social media.

"As soon as this became a PR (public relations) issue, they immediately bumped up her credit limit without asking for any additional documentation," he said in an interview. "My belief isn't that there was some nefarious person wanting to discriminate. But that doesn't matter. How do you know there isn't an issue with the machine-learning algo when no one can explain how this decision was made?"

This is the second such action from the regulator in recent weeks. The department opened a probe against healthcare giant UnitedHealth Group after a study found an algorithm favoured white patients over black patients.

The Apple Card is a joint venture between Apple and the New York-based bank, which is responsible for all the credit decisions on the card. The card was rolled out earlier this year.

 
 

Traditional lenders are upping their use of machines to decide who gets how much credit as part of a strategy to reduce costs and boost loan applications. Meanwhile, technology companies are moving in on the financial services industry's turf, with businesses such as Amazon, Apple, Facebook and Google offering loans and payment options.

The use of algorithms by lenders in credit decisions has drawn scrutiny in Congress. In June, the House Financial Services Committee heard about examples of algorithmic decision-making where researchers have found instances of bias targeting specific groups even when there was no intent to discriminate.

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A version of this article appeared in the print edition of The Straits Times on November 11, 2019, with the headline 'Tweet claiming sex bias sparks Apple Card probe'. Print Edition | Subscribe